According to reports, Robinhood Markets' cryptocurrency revenue unexpectedly surged, helping its third-quarter results exceed Wall Street expectations.
In the three months ending September 30, the company’s total revenue increased to $1.27 billion, double that of the same period last year and higher than analysts’ previous expectations of $1.2 billion.
The company stated that cryptocurrency trading generated nearly $270 million in revenue this quarter, an increase of over 300% compared to the same period last year.
Overall trading revenue grew by nearly 130% to $730 million, and earnings per share grew by nearly 260% to $0.61, exceeding analysts' forecasts of $0.51.
These data demonstrate how much volatility in cryptocurrency trading can impact Robinhood's quarterly results.
The new business line is beginning to play a significant role. Robinhood CFO Jason Warnick told investors that Bitstamp, which the company acquired in June, and its prediction market could generate approximately $100 million or more in revenue annually. This revenue has been incorporated into the company's growth plans.
The company, initially known for its free stock trading, has since expanded its product line. Currently, it offers tokenized versions of stocks and prediction market trading, and the acquisition of Bitstamp is part of this strategic move.
The report shows that executives believe there is room for expansion in the global forecasting market, but they say that specific rollout will depend on local regulations.
CEO Vladimir Tenev also discussed how tokenized stock offerings currently operate and what changes might occur in the future.
He stated that these products are "not as interoperable as we expected" because they have not yet been deployed on decentralized finance (DeFi) platforms, but he anticipates that interoperability will improve over time as developers build bridges and wrappers.
He believes this approach would make it easier to transfer tokenized assets between networks and services.
On the day the report was released, Robinhood's stock price rose 4% to $142 in regular trading, but fell back below $140 after the market closed.
The stock has risen more than 280% year-to-date and reached an all-time high of $152 on October 9, but its upward momentum cooled due to a subsequent sell-off in the cryptocurrency market.
These figures evoked mixed feelings among investors. Strong revenue growth was evident, but the business was closely tied to cryptocurrency trading volume, which is highly volatile.
Revenue from emerging sectors like Bitstamp and prediction markets is becoming substantial, but regulatory changes and market volatility could quickly alter this situation.
Analysts will be closely watching whether cryptocurrency revenues can remain high and how regulators will respond to the expanding issuance of equity tokenizations.
Currently, Robinhood's shift towards cryptocurrency and related services is already reflected in its performance.
The company reported significant growth, primarily driven by cryptocurrency trading users and several recently acquired or launched businesses that have generated substantial revenue.
