Robinhood’s third-quarter crypto trading revenue fell 55% year-over-year, earnings missed expectations, and its stock dropped more than 7% in after-hours trading.
1 days ago
Robinhood’s third-quarter earnings missed market expectations, as slowing crypto trading and rising expenses overshadowed strong performance in its options and prediction markets businesses. The company reported earnings per share (EPS) of $0.51, below the $0.55 consensus analyst estimate compiled by LSEG, with shares falling more than 7% in after-hours trading. In the third quarter, Robinhood’s crypto trading revenue dropped 55% year-over-year to $120 million. However, options trading revenue rose 31%, and event contract revenue surged more than sixfold, driving overall trading revenue up around 19% year-over-year to $867 million. Meanwhile, the company’s quarterly operating expenses increased 16% year-over-year to $739 million, driven primarily by higher credit loss provisions, investments in new businesses such as Trump Accounts and Rothera, and rising marketing spending. Robinhood CFO Shiv Verma said prediction markets, which have generated annualized revenue of nearly $500 million in less than two years since launch, are a key growth driver for the firm. Both sports and non-sports event contracts saw strong growth, with non-sports contracts accounting for a larger share of total trading volume. Bill Birmingham, head of research at REX Financial, noted that revenue growth lags behind contract volume growth, indicating that growth is increasingly concentrated in a small number of areas. He added: “Prediction markets are becoming a second trading channel for the same core active traders, rather than an entry point to attract new customers.” Some of the trading volume may stem from shifts in existing trading activities rather than new business.
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