Robinhood Reports 112% Jump in Crypto Trading Volume, but There's a Catch

Robinhood has announced a remarkable 112% year-over-year increase in its cryptocurrency trading volume, reaching a total of $14.4 billion in the third quarter of 2024. This surge, however, comes in the context of a noticeable decline in trading activity compared to earlier in the year.

• Trading volumes peaked at $36 billion in the first quarter but fell to $21.5 billion in the second quarter.
• The current figures indicate a significant drop in momentum since the start of the year.

Financial Performance and Analyst Expectations

Despite the slowdown in trading volume, Robinhood saw growth in its transaction-based revenue. The company's report shows a 72% increase in income year-over-year, totaling $319 million. Notably, cryptocurrency trading contributed $61 million to this figure, marking a 165% increase from the previous year, although it is down from $81 million in the prior quarter.

• Overall, Robinhood reported a net income of $150 million and total revenue of $637 million for the third quarter.
• These results, however, did not meet analysts’ expectations, with earnings per share (EPS) of $0.17 falling short of the Zacks Consensus Estimate of $0.18.

Strong Performance in Other Areas

Other segments of Robinhood's business also demonstrated robust performance. Options trading revenue surged to $202 million, reflecting a 63% increase from the same period last year, while equities trading generated $37 million, a 37% rise.

• Additionally, Robinhood's Assets Under Custody (AUC) grew by 76% year-over-year to $152.2 billion, driven by net deposits and increased valuations of stocks and cryptocurrencies.

Executive Insights on Q3 Results

Vlad Tenev, CEO and co-founder of Robinhood, expressed pride in the results, emphasizing that they reflect the strength of the company’s operations. He highlighted recent initiatives, including the launch of Robinhood Legend, a new desktop platform, and upcoming features like index options and futures.

• Chief Financial Officer Jason Warnick pointed to the quarter's overall strength, attributing a significant portion of revenue growth to the company's strategic focus.

Since launching its cryptocurrency services in February 2018, Robinhood has expanded its offerings beyond Bitcoin and Ethereum to include various other digital assets.