Robinhood Q3 earnings miss and crypto revenue drop don't dim Wall Street optimism
Robinhood earnings miss fails to shake analyst confidence
Robinhood reported a slight third-quarter earnings miss on Tuesday, but Wall Street analysts remain optimistic about the company's future. The stock fell 10% in the hours after results were released, though analysts called the drop an overreaction.
Total revenue came in at $1.42 billion for the quarter. Crypto revenue fell 55% to $120 million compared with the same period last year.
Key numbers from the quarter
- Total Q3 revenue: $1.42 billion
- Crypto revenue: $120 million, down 55% from last year
- Robinhood Chain net revenue: $26 million in its first quarter on mainnet
- Prediction markets revenue: $173 million for the quarter
- Robinhood Earn stablecoin product holds more than $500 million in assets
What Wall Street analysts say
Bernstein kept its outperform rating and $160 price target on Robinhood. StoneX maintained its buy rating and $170 price target.
StoneX analyst Mark Palmer said the negative market reaction was overdone. He noted that an unrealized loss on Robinhood Ventures Fund I pushed earnings per share down by $0.07. When excluding that loss and other items, earnings per share came in $0.60 above analyst expectations.
Bernstein analysts, led by Gautam Chhugani, said the company's crypto business is shifting from retail trading toward an infrastructure business. They project that prediction markets — platforms where people place bets on the outcome of real-world events — perpetual futures, and Robinhood Chain will generate roughly 25% of the company's revenue by 2028.
Crypto business shifts beyond trading
Robinhood Chain, the company's blockchain — a shared digital ledger that powers cryptocurrencies and other digital products — launched on mainnet in July and contributed $26 million in net revenue during its first quarter. Without that contribution, crypto revenue would have fallen 6% from the second quarter to $94 million.
Bernstein said Robinhood earned less revenue per dollar of crypto activity, mostly because of growth in Robinhood Earn. Earn is a stablecoin product, meaning it involves cryptocurrencies designed to hold a steady value, usually tied to the U.S. dollar. Earn brings in less revenue than regular crypto trading, which pulled down the overall average. Excluding Earn, revenue per dollar traded was roughly unchanged from the prior quarter.
Prediction markets were another area of growth, generating $173 million in quarterly revenue. Non-sports prediction contracts doubled their share to around 30%, led by crypto, commodities, and financial contracts.
Sources
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