Shares of Wealthfront (Nasdaq: WLTH) experienced a significant drop on Tuesday, tumbling over 16% by the close of trading. This decline came after the technology-driven financial services firm disclosed a downturn in its customer deposit inflows.
During the fiscal quarter ending October 31, Wealthfront reported a robust 21% year-over-year increase in total assets under management, reaching $92.8 billion. This rise was supported by a 20% growth in the number of funded client accounts, which rose to 1.38 million.
Wealthfront's online savings products, noted for their comparatively high yields and coverage of up to $8 million in FDIC insurance for individual accounts, contributed to a 14% growth in cash management assets, totaling $47 billion. These features underpin the firm's appeal in an increasingly competitive fintech savings landscape.
In addition to the expansion in cash management, the firm's investment advisory assets surged 31% year over year to $45.8 billion. This increase was partly driven by rising stock market valuations, which enhanced investment account balances. Concurrently, falling interest rates encouraged many clients to reallocate funds from savings to investment portfolios, diversifying their asset allocation within Wealthfront's platform.
Reflecting on these developments, CFO Alan Imberman highlighted in a press statement that their fiscal third quarter performance demonstrated a deliberate balance between cash management and investment advisory components within the business model.
Wealthfront also reported a 16% revenue increase year over year, amounting to $93.2 million during the quarter. Subsequently, earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 24% to $43.8 million, indicating improved operational profitability for the automated investing pioneer.
Despite these encouraging indicators, the market reacted unfavorably due to signs of slowing asset growth at the end of 2025. Specifically, Wealthfront experienced net deposit outflows totaling $208 million in December, which raised concerns among investors. Notably, the decline in cash management assets during this period largely negated the gains seen in investment advisory assets.
For context, in December 2024, the company had benefitted from net inflows of $874 million, underscoring a notable reversal in consumer behavior within one year.