The popular brokerage platform Robinhood experienced a significant stock decline of 12.4% this week, with a 10.1% drop on Thursday followed by a modest 1% rebound on Friday. In November alone, the platform has seen its market value shrink by 27%.
Robinhood's shares faced a harsh weekly loss, attributed to the waning enthusiasm for trades in bitcoin and artificial intelligence stocks that had previously driven its growth.
This recent downturn highlights a reversal in the high-risk investment activities essential to Robinhood's business model. The company's success heavily relies on retail investors engaging with speculative market areas, specifically cryptocurrencies and trending AI stocks.
Earlier this year, trades in these sectors fueled a surge in Robinhood’s revenue and user engagement, spurred by bitcoin reaching new highs and the soaring interest in AI. However, the recent declines in cryptocurrency and leading high-growth tech stocks have underscored Robinhood's vulnerability to shifts in market sentiment.
Bitcoin has decreased about 12% this week alone, reaching a new low of $80,548.09 on Friday—the lowest since April. Additionally, shares in AI-focused company Nvidia have dropped 6% this week.