Robinhood Shares Slide After Q4 Revenue Miss, Crypto Segment Leads Decline
New York, Feb 27 2024 – Robinhood Markets Inc. (NASDAQ: HOOD) saw its stock tumble in after‑hours trading on Tuesday following the release of its fourth‑quarter earnings, which fell short of Wall Street’s expectations. While the broker‑dealer posted a record $1.28 billion in total net revenue for the quarter, analysts had forecast $1.34 billion, prompting a 7.7 % drop in the share price to $79.04. The stock closed the regular session down 1.1 % at $85.60, extending a broader decline of more than 42 % since its peak of $148.67 on Oct. 3, 2023.
Earnings Overview
- Revenue: Q4 net revenue rose 27 % year‑over‑year to $1.28 billion, but missed the consensus estimate of $1.34 billion.
- Net Income: The company reported $605 million in net profit, a 34 % decrease from the same period last year.
- Earnings per Share: Adjusted EPS came in at $0.66, modestly beating the $0.63 forecast.
- Full‑Year Results: For the 2025 fiscal year, Robinhood posted a record $4.5 billion in revenue (up 52 % from 2024) and net income of $1.9 billion, a 35 % rise.
Crypto Segment Under Pressure
Robinhood’s crypto‑related revenue fell sharply, declining 38 % YoY to $221 million. The drop mirrors the prolonged drawdown that began in October across major digital assets, which dampened trading activity on the platform’s crypto exchange and its wholly‑owned Bitstamp venue. Nevertheless, notional crypto volumes posted a modest 3 % quarterly increase, reaching a new high of $82.4 billion.
By contrast, equity trade volumes expanded 10 % quarter‑on‑quarter to $710 billion, while options contracts grew 8 % to 659 million. The divergent performance highlights the growing reliance of Robinhood on its non‑crypto product suite.
“Other” Transaction Revenues Take Center Stage
Revenue from “other” transaction‑based services—encompassing prediction markets, futures and the newly added event‑contract platform— surged to $147 million in Q4, a 375 % year‑over‑year jump. For the first time, these earnings eclipsed those generated by equity trades, underscoring the firm’s strategic pivot toward diversified, high‑margin offerings.
Market Reaction and Analyst Viewpoint
The earnings miss and crypto revenue contraction sparked a sell‑off, with shares sliding 7.66 % in after‑hours trading. Analysts cited concerns that Robinhood’s exposure to the volatile crypto market could curb growth, even as the firm’s broader product mix begins to offset some of that risk.
However, some market participants noted that the beat on EPS and the continued momentum in “other” services provide a cushion. The modest beat suggests operational efficiencies, while the steep rise in prediction‑market income hints at a potential new revenue engine.
Management Outlook
CEO and Chairman Vlad Tenev reaffirmed the company’s long‑term ambition, stating, “Our vision hasn’t changed: we are building the Financial SuperApp.” The comment signals an ongoing push to integrate banking, investing, and emerging services into a single platform, aiming to reduce reliance on any single product line.
Key Takeaways
- Revenue Miss: Total Q4 revenue fell short of expectations despite a 27 % YoY increase, leading to a noticeable share‑price decline.
- Crypto Drag: Crypto‑related earnings slumped 38 % YoY, reflecting the broader market downturn and prompting investors to reassess the segment’s contribution.
- Diversification Payoff: “Other” transaction revenue exploded, overtaking equity trade revenue and highlighting the effectiveness of Robinhood’s expansion into prediction markets and futures.
- Stock Pressure: The stock remains over 40 % below its recent high, indicating sustained investor skepticism.
- Strategic Focus: Management’s emphasis on a “Financial SuperApp” suggests continued investment in non‑crypto offerings to stabilize earnings.
Robinhood’s Q4 results illustrate the challenges of balancing a high‑growth crypto business with the volatility inherent in digital assets, while also showcasing the potential of a diversified product suite to offset sector‑specific headwinds. The market will be watching closely how the firm’s “SuperApp” strategy translates into sustainable earnings in the coming quarters.
Source: https://cointelegraph.com/news/robinhood-shares-dip-q4-earnings-miss-crypto-revenues-decline?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
