Robinhood Shares Drop After Warning Trading Activity Is Slowing Down

Plus, Macy’s and Kohl’s reported earnings beats, the FTC filed a new antitrust complaint against Facebook, and Chipotle announced it is testing a new meatless chorizo in two markets. 

Stocks were lower at the open on Thursday with the Dow dropping 86 points, or 0.2%. The S&P 500 fell by 0.4%, while the Nasdaq slid by 0.7%.

Robinhood shares have dropped more than 9% this morning after the company said trading activity on its app was slowing down and would hit revenues in the current quarter. For the second quarter, Robinhood reported that revenue surged more than 131% year-over-year to $565 million, bolstered in part by strong crypto trading with 62% of crypto revenue coming from Dogecoin. “For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter,” Robinhood said in the earnings release. “If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected.”

Macy’s shares are up more than 15% at the time of writing after the department store chain reported a massive earnings beat. The company reported earnings per share of $1.29 on revenue of $5.65 billion, versus estimates for earnings per share of $0.19 on revenue of $5.01 billion. Macy’s also announced a new partnership with WHP Global to bring Toys”R”Us outlets into 400 of its department stores in 2022. In other retailer earnings, Kohl’s posted earnings per share of $2.48 on revenue of $4.45 billion, while analysts were expecting a reading for earnings per share of $1.21 on revenue of $4.02 billion. “Based on our results, we are raising our full year 2021 guidance, which positions us to achieve many of our 2023 strategic goals this year, well ahead of our plan,” CEO Michelle Gass said in a statement.

Speaking of department stores, Amazon is reportedly planning to open large retail locations akin to department stores, according to a report from The Wall Street Journal. The locations are expected to take up around 30,000 square feet – the size of the typical Kohl’s or TJMaxx store, and would mark Amazon’s latest experiment with physical retail spaces. Based on the size of the store Amazon is reportedly considering, the new stores will likely open in strip malls. The news hit shares of big-box rivals Bed Bath & Beyond, Best Buy, Target, and Walmart in early trading. 

The FTC filed a new antitrust complaint against Facebook today. The complaint marks a continuation of its fight in federal court after a judge threw out the FTC’s initial claims. U.S. District Judge James Boasberg gave the FTC a second opportunity to bring its claims that Facebook has illegally maintained a monopoly after dismissing its first complaint in June. The suit, which was originally filed in December 2020, seeks to break up the social media giant by unwinding is acquisitions of Instagram and WhatsApp. 

And Chipotle announced that it is testing meat-free chorizo in outposts in Indianapolis and Denver. The plant-based chorizo would be the company’s first new meatless protein option since it added its tofu-based sofritas back in 2014. Chipotle said its plant-based chorizo is certified vegan, and free of artificial flavors, colors, and preservatives, as well as grains, gluten, and soy. “Plant-based lifestyles have continued to accelerate in popularity, and as a longtime leader in the category, we are exploring ways to give more variety to our fans,” Chris Brandt, Chief Marketing Officer, said in a press release. “We used real ingredients to create a plant-based protein with a deep, rich Chorizo flavor that can be enjoyed by everyone.”

Stocks We’re Watching

Alcon Inc (NYSE: ALC): Alcon shares jumped 12% yesterday after the eye care company reported second quarter sales gained 75% to $2.1 billion. “Our second quarter performance demonstrates the strength and resilience of our businesses, with our highest quarterly sales and earnings since our spin-off,” David Endicott, Alcon’s CEO, said in the earnings release. “Strong commercial execution behind our new product launches resulted in all sales categories in Surgical and Vision Care posting growth over 2019, notwithstanding the continued impact of COVID-19. The healthy recovery in the business underlies our confidence in driving top line growth with continued innovation and the growing demand for eye care. With the ongoing expansion of our manufacturing capacity, we remain focused on maintaining a steady stream of product flow as we expand our portfolio and respond to market demand.”