After a much-anticipated initial public offering (IPO), Robinhood (NASDAQ:HOOD) stock is now down over 40% in 2022. The company reported Q1 earnings on April 28, and the results were quite disappointing. Revenue came in at $299 million, missing estimates of $355.8 million by a whopping 16%.
Below the surface, HOOD stock’s earnings showed monthly average users (MAUs) of 15.9 million. A year ago, that figure came in at 17.7 million MAUs. Furthermore, average revenue per user clocked in at $53, down from $137 a year ago and $64 in the previous quarter.
Despite a lackluster first quarter, however, Cathie Wood’s Ark Invest reported purchasing shares of the company yesterday.
Cathie Wood Buys HOOD Stock
On May 5, the Ark Fintech Innovation ETF (NYSEARCA:ARKF) reported purchasing 255,670 shares. This was the ETF’s first purchase since May 2, when it purchased 270,795 shares. After the purchase, ARKF owns a total of 5.24 million shares, which accounts for 5.23% of the ETF, making it the 6th-largest position. Out of all Ark ETFs, Robinhood is the 18th-largest position with a 1.83% allocation. In total, Ark Invest owns 30.14 million shares.
Ark Invest also disclosed a massive purchase prior to Q1 earnings. On April 21 and April 22, the Ark Innovation ETF (NYSEARCA:ARKK) purchased 896,001 shares.
Ark Invest has been adding to its Robinhood position since its IPO last July, over a time period in which shares have lost more than 70%. The Ark ETFs have only reported selling HOOD one time, which occurred on Dec. 27 when two funds sold 125,710 shares. Three days later, the ETFs bought back the shares sold, and more, buying up 793,511 shares.
Cathie Wood likely believes that HOOD’s losses since its IPO are overstretched. The company currently has a market capitalization of about $8.8 billion, which would imply a low price-sales ratio of 5x.
Robinhood Initiates Stock Lending Program
On Wednesday, Robinhood announced that it would be launching its stock lending program. As part of the program, Robinhood users will be able to lend out shares owned to other users and collect a fee. Robinhood CFO Jason Warnick believes that the program will “potentially bring in 1-to-2 times the revenue that Robinhood’s margin securities lending program generates.”
Robinhood already earns revenue by lending out shares bought on margin by its customers. However, the new program will include all shares held by the brokerage’s users, as long as they opt in and meet certain conditions.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
