Everyone Talking Robinhood NASDAQ: HOOD AMC GME

Robinhood Markets (NASDAQ: HOOD) recently became a hot topic again after a series of negative developments caused the online brokerage’s stock to tumble below its IPO price of $38. Let’s review those headlines, if investors overreacted, and if its stock is still worth buying.

An ugly earnings miss

Robinhood’s latest decline started after it released its disappointing third-quarter earnings report on Oct. 26. Its revenue grew 35% year over year to $365 million, but missed analysts’ estimates by nearly $73 million. Its guidance for “less than $1.8 billion” in revenue for the full year, which implies a maximum of 85% growth, also broadly missed expectations for 111% growth.

To make matters worse, Robinhood’s monthly active users (MAUs), funded accounts, assets under custody (AUC), and average revenue per user (ARPU) all declined on a sequential basis. It blamed that slowdown on the market’s waning interest in more speculative cryptocurrencies like Dogecoin (CRYPTO: DOGE).

On the bottom line, Robinhood’s net loss widened from $11 million to $1.32 billion as it paid out a whopping $1.24 billion in stock-based compensation expenses. Those bonuses were pegged to the stock’s post-IPO performance, and its initial rally — which boosted its shares to an all-time high of $85 a share on Aug. 4 — triggered the massive payouts to the company’s founders.