Remember the meme stock craze? Those were fun times. Now the payback: Robinhood says it is slashing 23% of jobs, blaming “deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”. This has further reduced customer trading activity and assets under custody. Robinhood cut headcount by 9% in April but this did not go far enough.
Tough times for the retailer broker, which released quarterly results a day early. Revenues fell to $318m from $565m in the same quarter a year before. It also lost almost 2m customers over the quarter – or about one in eight of its base.
Monthly active users decreased 1.9m sequentially to 14m. Net deposits however were up 22% to $5.2bn, so it’s not all doom and gloom. In fact, normalisation is probably a good thing – less hot money chasing stupid trades is surely a good thing?
MicroStrategy books impairment charge
Speaking of which, Michael Saylor is stepping down as CEO of MicroStrategy to spend more time with his Bitcoin. No, really. Saylor says the move to executive chairman role will let him “focus more on our Bitcoin acquisition strategy and related Bitcoin advocacy initiatives”.
Undeterred, the company booked a $917.8 million impairment charge on its Bitcoin holdings, leading to a net quarterly loss of $1.06bn compared with a loss of $299.3 million in the same quarter of last year.
But…remember meme stocks? Remember the clever short squeeze tactic for GameStop? More than half of MicroStrategy shares are on loan for shorts, according to S3 Partners. Shorts are selling into the recent pop for the stock which mirrors a small rebound for crypto markets and the broader tech space since bottoming around the middle of June.
With that kind of heavy short exposure it’s a prime target for the ‘degenerates’ to take aim -a short squeeze on MSTR could be brutal. We will look to see what kind of options activity might be in play.
AMTD Digital is the new GameStop
But for now, their sights are set on AMTD Digital (HKD): the stock soared 126% on Tuesday to set a new high of $1,679. It’s by far the most mentioned stock on WallStreetBets, the Reddit thread for stock trading that became famous during the meme frenzy.
HKD only IPO’d a couple of weeks ago and is up 30,000% since. It’s owned by AMTD Idea Group, a Chinese financial company traded under the ticker symbol AMTD. No one knows what is going on…meme central.
MSTR is also among the most talked about companies. I have nothing to say except be careful out there if trying to trade this kind of stock.