Shares of Wealthfront (Nasdaq: WLTH) sank on Tuesday after the tech-powered financial services provider reported a downturn in its customer deposits.
By the close of trading, Wealthfront's stock price had fallen more than 16%.
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Assets fuel Wealthfront's earnings growth
Total assets on Wealthfront's platform jumped 21% year over year to $92.8 billion in the quarter ended Oct. 31. The gains were driven by a 20% rise in funded client accounts to 1.38 million.
The wealth management specialist offers relatively high yields on its online savings products with up to $8 million in FDIC insurance for individual accounts. These attractive features helped to fuel a 14% increase in the fintech's cash management assets to $47 billion.
Additionally, rising stock prices contributed to a 31% surge in Wealthfront's investment advisory assets to $45.8 billion. Declining interest rates also played a role, as they prompted many clients to transfer funds from their savings accounts to their investment accounts.
"Our fiscal third quarter results highlighted the purposeful balance of the business model between cash management and investment advisory," chief financial officer Alan Imberman said in a press release.
All told, Wealthfront's revenue rose 16% year over year to $93.2 million. In turn, the automated investing pioneer's earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 24% to $43.8 million.
A worrisome trend
However, investors appeared to focus on a slowdown in Wealthfront's asset growth at the end of 2025. It saw $208 million in net deposit outflows in December. Moreover, the decline in Wealthfront's cash management assets largely offset the rise in its investment advisory assets.
In December 2024, Wealthfront enjoyed net inflows of $874 million.
