But one analyst remains bullish that the company can turn the corner, especially with new product launches on the horizon.
"People were pushing back that this company can't be profitable," Devin Ryan, director of financial technology research at JMP Securities, told Yahoo Finance (video above). "And what we talked about, following earnings and some time with management, is I think they're actually already profitable in real-time right now."
Last Wednesday, the app-based brokerage reported a net loss of $295 million in the second quarter. Net revenue, meanwhile, dropped to $318 million, down 44% from a year ago.
In a note to clients, Ryan asserted that the company's recent actions "established a stronger and more efficient business to operate through all market conditions" and highlighted three core themes currently affecting the company: expense reductions, interest rate sensitivity, and new products.
"While the current operating environment has clearly been challenging as a result of well-above average volatility and macro uncertainty, this does not represent a new normal, in our view," Ryan wrote. "We believe that Robinhood’s continued execution on its product roadmap, diversification of revenue streams (including sizeable benefits from rising interest rates), and continued organic resilience (22% annualized net customer deposit growth in 2Q22) position the firm well to grow at an accelerated rate when the operating backdrop and engagement normalize."
Ryan reiterated an outperform rating and issued a $28 price target on the stock. Robinhood stock closed at $10.68 on Monday.
'That will help transactional activity'
Ryan emphasized Robinhood's slate of product launches this year as a major advantage for the company over the long term.
"This is the year where they're investing in new products and services," Ryan said. "And a lot of those, they don't come into revenues on day one, but that's the future of the company. You believe in the stock, you have to believe they'll have success beyond just trading."
Robinhood recently added more features for advanced users by launching options trading in cash accounts for eligible customers. And earlier this year, the brokerage rolled out its non-custodial cryptocurrency wallet, giving access to more than 2 million customers that were on a waiting list for the product.
In Ryan's view, Robinhood has differentiated its non-custodial wallet from others and should "market that more to get the word out."
And although monthly users on Robinhood's app have declined since the meme-stock frenzy of early 2021, Ryan added, better market conditions and a potential resurgence of the meme trade could attract more users to the platform.
"Inevitably, we're gonna get more clarity on the macro," Ryan told Yahoo Finance Live. "The markets will stabilize, volatility will come down and that will help transactional activity."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv