This article was written by Market Specialists Keith Gerstein, Jessica McConaghie and Ming Hon Lee, with assistance by Sam Radowitz, Kelly Lai, and Leon Huang and first appeared on the Bloomberg Terminal and Bloomberg Markets Magazine.
Background
Inflation and rising interest rates have battered many industries—including technology. But the sector is also facing idiosyncratic issues relating to trust: questions about privacy, cybersecurity and evolving technology. The environment has been brutal for tech stocks. Shares of Robinhood Markets Inc. were down 53% this year through Nov. 9. Yet the trading platform was ahead of Meta Platforms Inc., which had dropped 70%, and Coinbase Global Inc., which had plummeted 82%.
Issue
Robinhood
Many new retail investors turned to apps on their phones to trade stocks, exchange-traded funds and cryptocurrencies in 2020. A key beneficiary was Robinhood. The trading platform listed its stock in July 2021—around the time its monthly active users reached a high of 18.9 million.
Robinhood has been hit by data breaches and criticized for a lack of transparency about the payment for order flow that finances commission-free trades. Back in March 2020 service outages on the platform blocked users from executing trades, causing some to miss buy-in points and keeping others locked into positions they wanted to exit. The company has faced class actions and other lawsuits. Robinhood declined to comment for this story.
Tracking and Measurements
To get a sense of the potential costs to the company, use the Company Financials (MODL) function. Type “Robinhood” on the command line of a Bloomberg screen and click on the HOOD US Equity match. In the menu of functions that appears, click the MODL link. The shortcut is {HOOD US <Equity> MODL <GO>}. Click the Single Period tab if it’s not already selected, and set the Period to 2022* Annual. Scroll down to the Income Statement section and click on the chart icon to the left of Litigation & Tax Settlements. The 2022 year end expectations have rapidly increased during the October month compared to the estimates at the beginning of the year. Here you can see the contributing brokers who cover this security. To ensure you are enabled to view these you can go to ENTC<GO> to manage your entitlements. If there is a broker you would like to see who is not here, please contact researchsupp@bloomberg.net for further information.
Coinbase
Like Robinhood, crypto-trading platform Coinbase went public in 2021. Coinbase’s verified users have continued to climb, reaching 108 million in the third quarter of 2022.
Tracking and Measurements
To see how the company’s management is fielding questions during earnings and other calls, you can use the Document Search & Analytics (DSCO) function. Run {COIN US <Equity> DSCO <GO>}. Click the button under Source, select Transcripts and hit Apply. Then use the Remark Type drop-down to select Mgmt Answers.
Topics that had been mentioned most frequently in the two years through early November were Cryptocurrency, Regulation and Revenue. The topic that had recently increased the most was Headwinds which can affect users and revenue growth as bitcoin based news continues to affect the market.
Bloomberg
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