2024-05-09
Shares in the popular trading platform experienced a significant increase of 7% following the company's surpassing of first-quarter revenue and earnings expectations.
During the first quarter, Robinhood (HOOD) witnessed a notional crypto trading volume of $36 billion, marking a remarkable growth of 224% compared to the previous year.
This surge resulted in a 232% rise in crypto-related revenue, amounting to $126 million. The company attributes this growth as a primary driver behind the overall 59% year-over-year increase in transaction-based revenue, totaling $329 million.
As of March 31, Robinhood held $26.2 billion in user's crypto, exhibiting a 78% surge from the end of 2022. The increase in transaction revenue due to crypto trading aligns with the impressive first-quarter performance of another publicly traded crypto peer, Coinbase (COIN), which also reported exceptional results due to favorable crypto market conditions.
Subsequent to this news, Robinhood's shares rose approximately 7% in post-market trading on Wednesday, while Coinbase shares experienced a slight decline. Year-to-date, HOOD stock has surged by approximately 40%, while COIN has gained 22%.
Furthermore, Robinhood outperformed market expectations for both sales and earnings in the first quarter. The company recorded $618 million in revenue, surpassing analyst estimates of $552.7 million, according to FactSet data.
Additionally, first-quarter earnings amounted to $0.18 per share, exceeding the average analyst forecast of $0.06.
It is worth noting that Robinhood recently received a Wells Notice from the U.S. Securities and Exchange Commission for its crypto division.
During an earnings conference call, Robinhood's CFO, Jason Warnick, expressed disappointment regarding the notice but clarified that it has no impact on customer accounts.
He emphasized that the company's crypto arm operates in accordance with strict legal and compliance standards, similar to its brokerage operations. Warnick added that the increased regulatory scrutiny is disheartening, as Robinhood has maintained a conservative approach in terms of services offered and adheres to regulatory requirements.
