Robinhood Markets Inc. (HOOD) is riding the crypto wave, reporting a staggering 112% year-over-year surge in cryptocurrency trading volumes during the third quarter. The company’s financial report, released after Wednesday’s closing bell, revealed a notional cryptocurrency trading volume of $14.4 billion.
This dramatic increase is not just a blip on the radar. Robinhood’s Chief Financial Officer, Jason Warnick, shared during the earnings call that the company’s notional volume surpassed $5 billion in October alone, poised to exceed the monthly average for the entire third quarter. This growth directly translates to a significant boost in cryptocurrency-related revenue, soaring to $61 million, up 165% year-over-year.
The surge in crypto trading volumes and revenue isn’t the only positive development for Robinhood. The company also observed a notable increase in cryptocurrency rebates. These rebates climbed to 48 basis points in October, up from the average 44 basis points in the third quarter and a mere 35 basis points at the start of the year. These rebates, offered by Robinhood Crypto, the company’s cryptocurrency arm, allow users to trade popular coins such as Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), Dogecoin (CRYPTO: DOGE), and others.
However, despite this strong performance in its crypto division, Robinhood’s overall revenue came in at $637 million, falling short of the analyst consensus estimate of $650.67 million. This shortcoming, coupled with the increased competition in the financial technology space, led to a 12.4% plunge in Robinhood’s share price in after-hours trading following the earnings report.
These developments highlight Robinhood’s commitment to expanding its trading offerings and attracting active traders. The company’s recent launch of presidential election event contracts through its subsidiary, Robinhood Derivatives, LLC (RHD), exemplifies this strategy. While initially available only to a select group, these contracts, which allow users to trade based on predictions of the 2024 presidential election outcome, have now been rolled out to all customers.
Robinhood’s focus on active traders and its impressive growth in the crypto space suggest a continued push for innovation and expansion in the financial services landscape. The company’s future performance, however, will largely depend on its ability to navigate the increasingly competitive market and deliver consistent revenue growth.
