Webull Corp (NASDAQ: WEBULL) saw its shares decline 5.4% in after-hours trading Thursday, as the online brokerage reported a first-quarter net loss that reversed a profit from the prior year, driven by a sharp increase in operating expenses. The company's stock last traded at $6.61, down from its previous close, amid heavy volume of 32.7 million shares.
The report provides a critical snapshot of retail trading activity just weeks before new U.S. day-trading regulations take effect in June. Despite the revenue growth, the company swung to a GAAP net loss of $21.7 million for the quarter ended March 31, compared with net income of $13.1 million a year earlier. Total revenue rose 36% year-over-year to $159.9 million.
Costs Outpace Revenue Growth
Total operating expenses surged 68% to $162.3 million, fueled by higher spending on marketing and branding, brokerage and transaction costs, product expansion, and share-based compensation. On an adjusted basis, which excludes items like stock-based compensation, operating profit fell to $14.8 million from $28.7 million in the same quarter last year. This marks the sixth consecutive quarter of adjusted profitability for the company, according to CFO H.C. Wang.
Group President and U.S. CEO Anthony Denier described the quarter as a 'strong start' to Webull's second year as a publicly traded company, highlighting ongoing beta testing of AI tools, including the Vega Analyst platform.
Strong Trading Metrics
Customer assets soared 90% to $24.6 billion, while funded accounts grew to 5.11 million and registered users reached 27.6 million. Equity notional volume—the dollar value of stock trades processed on the platform—more than doubled, rising 104% to $261 billion. Options contract volume increased 31% to 159 million. Daily average revenue trades (DARTs), a key metric for brokerages, climbed to approximately 1.3 million.
The surge in trading activity comes ahead of the Financial Industry Regulatory Authority's (FINRA) new intraday margin standards, set to take effect June 4. The new rules eliminate the previous $25,000 minimum equity requirement for pattern day traders, a change that analysts expect to boost order flow and revenue for firms like Webull and Robinhood Markets (NASDAQ: HOOD). Webull stated it has built infrastructure to support the transition and anticipates increased active trading under the new framework.
Market and Competitive Context
The broader market showed strength on Thursday, with the Dow Jones Industrial Average closing at a record high, while the S&P 500 and Nasdaq Composite each posted modest gains. Webull's decline stood out against this favorable backdrop.
Northland analyst Mike Grondahl noted that the regulatory shift could lead to more orders per user per day, directly benefiting brokerages. However, Webull's expenses are rising faster than revenue, and the business remains heavily dependent on trading activity, interest rates, market volatility, and payment for order flow. The company's latest filings also highlight risks related to regulation, cybersecurity, China exposure, cryptocurrency markets, and global expansion, as well as the potential suspension of its $100 million share buyback program.
Investors now face a mixed picture: a broker that continues to add users, assets, and trades, but at a cost that is squeezing margins. The key question is whether the June rule change will deliver sufficient volume growth to offset these rising expenses.
