Robinhood Markets Inc. saw a sharp 12.4% drop in after-hours trading following a Q3 earnings report that failed to meet Wall Street’s expectations.
Despite a doubling of crypto trading volume and revenue, the company’s financials fell short of industry forecasts, signaling mixed responses from investors.
Robinhood Shares Drop 12.4% After Q3 Earnings
The trading platform reported $150 million in net income and $637 million in revenue for the third quarter, slightly below the estimates anticipated by analysts. Robinhood’s $0.17 earnings per share (EPS) missed the Zacks Consensus Estimate of $0.18, while total revenue came in 3.6% lower than Zacks’ $661.2 million prediction.
Robinhood’s Q3 earnings did however, reveal impressive growth in its crypto sector. The platform’s crypto trading volume surged 112% year-over-year, reaching $14.4 billion. Additionally, revenue from crypto transactions spiked 165% to $61 million compared to the same period last year.
This rise in crypto-related income helped Robinhood swing back into profitability, supported by gains in its transaction-based revenue, which jumped 72% to $319 million, largely driven by options and cryptocurrency trading.
In other updates, Robinhood reported new highs in its premium Gold subscription membership, which now includes 2.2 million subscribers. The company also noted a significant rollout of its Robinhood Gold Cards, with nearly 100,000 customers now in possession of this exclusive offering.
The Future Plan for Robinhood
The company has taken steps to expand its offerings to a broader audience, unveiling several features aimed at attracting both novice and experienced traders. In October, Robinhood introduced futures and index options trading on its mobile app, along with the launch of its long-anticipated desktop trading platform.
These new features are designed to rival traditional brokerages that cater to experienced investors, marking a notable shift for the platform primarily known for its appeal to retail investors.
Robinhood’s Involment in the Crypto Sector
In June, Robinhood announced its acquisition of Bitstamp, a prominent cryptocurrency exchange, for $200 million. This acquisition will facilitate Robinhood’s entry into the institutional crypto market in the U.S., broadening its reach beyond retail investors.
The deal, which is subject to regulatory review, is expected to be finalized in the first half of 2025. Robinhood has been steadily expanding its crypto offerings since launching its cryptocurrency unit in February 2018, initially providing Bitcoin and Ether trading in select U.S. states.
The dip in share price reflects mixed investor sentiment as Robinhood navigates a competitive landscape while expanding its crypto and international presence.
The company’s latest moves signal a clear intention to diversify its revenue sources and compete with traditional brokerages, a strategy that could prove pivotal in shaping Robinhood’s future in both the U.S. and global markets.