Robinhood (HOOD), the popular trading platform, said in a statement that its cryptocurrency revenue rose 10% from a year earlier in the fourth quarter, to $43 million, with more users trading cryptocurrencies. This could bode well for cryptocurrency trading peer Coinbase (COIN), where trading volume is a major contributor to revenue.
The company said in a presentation that the virtual volume of cryptocurrency trades it handled rose 89% compared to the previous quarter due to more clients making higher volumes of trades.
The higher volume is not surprising as prices in the digital asset market rose on optimism over the approval of Bitcoin exchange-traded funds (ETFs) in the US (it happened in January).
Robinhood said its transaction-based revenue for the quarter rose 8% from a year earlier, driven primarily by cryptocurrency trading. Coinbase will report earnings on Thursday and may see results similar to its trading volume – all else being equal. COIN shares rose slightly in post-market trading on Tuesday.
Robinhood also expects to win more cryptocurrency trading market share this year and expand globally. Lately, it has Allowing began EU clients trade cryptocurrencies on its platform.
“2023 was a strong year as the speed of our products continued to accelerate, our trading market share increased, and we began to expand globally,” Vlad Tenev, CEO and co-founder of Robinhood, said in a statement. “We are off to a better start in 2024, having already brought in more funded clients and net deposits during the first half of the first quarter than we did in the entire fourth quarter of 2023,” he added.
The trading platform also said its total revenue in the fourth quarter was $471 million, beating analysts' average estimate of $454.7 million, according to FactSet data. Meanwhile, earnings per share came in at $0.03, beating estimates for a loss of $0.01 per share.
The company's shares rose about 15% on Tuesday after the results were announced. For the year, the stock is down about 7% versus the S&P 500's 4.4% advance.
