Robinhood Stock Drops 7% on Crypto Slump and Tighter Spreads
Robinhood shares fell 7% to $88 after a 55% drop in crypto revenue overshadowed record prediction markets performance in the third quarter.
Robinhood Markets saw its stock sink 7% to $88 in morning trading on October 28 following its third-quarter financial report, as steep declines in digital asset trading and net interest income overshadowed record metrics in its newer prediction markets business.
According to YahooStocks5, Robinhood reported total revenue rose 12% year over year to $1.42 billion, landing just under the $1.43 billion Bloomberg consensus. Diluted GAAP earnings per share came in at $0.51, down from a year earlier and below Bloomberg's $0.57 estimate, while adjusted earnings reached $0.60 per share to top the $0.55 consensus. Operating expenses increased 16% to $739 million, outpacing revenue growth.
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Revenue Pressures in Crypto and Interest
The company’s traditional revenue engines faced headwinds during the quarter. Crypto trading revenue tumbled 55% year over year to $120 million, accompanied by a 38% drop in crypto trading volume. Net interest revenue slid 9% to $415 million, driven in part by weaker securities lending demand amid fewer initial public offerings and lower market volatility. Chief Financial Officer Shiv Verma noted that early indications point to tighter spreads heading into the fourth quarter.
Growth in Prediction Markets and Options
Offsetting the digital asset decline, Robinhood posted a record $173 million in prediction markets revenue, with customers trading 16.4 billion event contracts. Options trading revenue grew 31%, equities trading revenue jumped 41%, and total transaction revenue rose 19% to $867 million. Net deposits remained strong at $15.7 billion, though down from $21.7 billion in the second quarter.
While Robinhood shares declined, rival platforms held steady. Interactive Brokers stock edged up 2% to $83, and Webull stock rose 0.2% to $5.60, indicating that the selling pressure remained specific to Robinhood.
Key facts
- Robinhood stock fell 7% to $88 in morning trading following its Q3 results.
- Total revenue rose 12% year over year to $1.42 billion.
- Crypto trading revenue dropped 55% year over year to $120 million.
- Prediction markets revenue reached a record $173 million on 16.4 billion event contracts.
- Net interest revenue slid 9% to $415 million.
Source: 247wallst.com
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