Shares of Robinhood Markets Inc fell more than 14% and were set to open Friday's session at their lowest level since the stock's IPO in July after the commission-free brokerage posted a quarterly loss on Thursday evening.
The company reported a net loss of $423 million for the three months ended December, compared to a profit a year earlier, and its costs more than doubled.
Like many tech start-ups, Robinhood has yet to turn a profit following its IPO. Its monthly active users declined 8% from the sequentially previous quarter as retail investors pulled back from the market.
"Robinhood was one of the pandemic darlings. Almost exactly a year ago, it sat at the center of the meme stock mania. And that has clearly cooled off as we headed into a new year," Art Hogan, chief market strategist at National Securities in New York, said.
"Its popularity seems to be on the decline. And its revenue growth is following in the wake of its declining popularity. So when you when you sum all that together, it likely has a choppy road in front of it."
The stock was trading at $9.93 before the bell on Friday. The share price at its IPO in July last year was $38 and its record high in August was $85.
Short interest in Robinhood was $501 million, or 10.77% of float, with about $127 million worth of shares shorted over the last 30 days alone, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
The stock was also among the most active and watched on retail trading forum Stocktwits and trending discussions on Reddit as well.
(Reporting by Noor Zainab Hussain, Medha Singh and Anisha Sircar in Bengaluru; Editing by Shounak Dasgupta) ((email@example.com; Within U.S. +1 646 223 8780; Outside U.S. +91 80 6182 2663 or +91 80 3796 2663))