Robinhood Markets' stock dropped about 6% in after-hours trading yesterday after this retail trading platform revealed a 34% decrease in crypto revenue for the quarter, pulling Q1 results below Wall Street expectations.
The company in Menlo Park reported Q1 profits of $346 million, equivalent to $0.38 per share, just slightly below analysts' forecast of $0.39 per share, although profits increased by 3% compared to the same quarter last year.
Crypto revenue dips as Bitcoin cools off.
Crypto trading in the last quarter generated 134 million USD in revenue for Robinhood, a sharp decline from 221 million USD in the previous quarter. Bitcoin (BTC) also dropped 22% during this same period.
Total revenue reached 1.07 billion USD, below analysts' expectations of 1.14 billion USD. This occurred despite revenues from stocks, options, futures, and prediction markets all seeing double-digit growth or hitting record highs, according to the company's announcement.
Trading fees were a key factor that helped Robinhood grow significantly last year, when HOOD shares peaked at 153.86 USD in October, coinciding with a crypto market surge.
Robinhood shares dropped after this report and are trading at 82.05 USD at the time of writing.
Robinhood (HOOD) stock performance. Source: TradingView
Prediction markets and tokenization help mitigate negative impacts.
Chairman and CEO Vlad Tenev emphasized the company's expanding role in the financial landscape for customers.
"Robinhood is increasingly becoming a hub in customers' financial lives," he stated during the broadcast.
The betting activity through prediction markets provided by Kalshi has recorded a record trading volume, thanks to a fee of just 1 cent per trade.
Robinhood has also launched a public testnet for Robinhood Chain, a layer-2 network of Ethereum (ETH) centered around tokenized assets.
Total assets on the platform are at 307 billion USD, slightly down from 324 billion USD at the end of last year but still up 39% compared to the same period last year.
The tokenized stock product for the European market, providing access to private companies like OpenAI and SpaceX, has handled over 100 million trades since launch.
The sell-off of HOOD shares after hours pushed the stock price down to around 82 USD, significantly lower than its October peak. The future will depend on whether prediction markets and asset tokenization can offset the cooling of digital asset trading.
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