Robinhood (HOOD) is set to report its highest quarterly revenue in nearly three years, driven by a rebound in equity markets and increased crypto trading activity. Bets on global interest rate cuts sent U.S. stocks and bitcoin to record highs earlier this year, attracting traders back to the markets. This resurgence helped the retail-focused brokerage earn higher transaction-based revenue. The trading platform, which became synonymous with the meme stock frenzy in 2021, is now bouncing back after a pandemic-led trading activity surge and subsequent slowdown.
According to J.P. Morgan (JPM) analysts, Robinhood experienced a significant rebound in trading volumes across equities, options, and crypto, with total volumes up nearly 20% in the first quarter through February. This strong trading activity propelled Robinhood's shares to a 58% increase in the first three months of the year, marking its sharpest quarterly stock surge since its IPO. Data from Apptopia showed a 65% surge in daily active users for Robinhood in March compared to a year earlier, while new mobile app downloads jumped 94% in the same period.
Market Overview:
-Robinhood expects its highest quarterly revenue in nearly three years, fueled by a market rebound and increased crypto trading.
Key Points:
-Rising interest rates and a strong stock market attracted retail investors back to Robinhood after a pandemic-driven surge.
-Analysts predict a 24% revenue increase to $548.61 million, bolstered by net interest revenue growth.
-This marks a significant turnaround after Robinhood faced a slowdown following the 2021 meme stock frenzy.
Looking Ahead:
-Robinhood's rebound highlights the platform's continued relevance despite past volatility.
-Increased net interest revenue indicates a growing base of users borrowing money to invest.
-The company aims for continued profitability in 2024, signifying a potential shift towards a more sustainable business model.
Menlo Park, California-based Robinhood, known for popularizing commission-free trading, will benefit from a substantial increase in net interest revenue. The biggest driver of the company's top line, net interest revenue, is expected to rise 24% to $258.24 million in the first quarter, according to LSEG data. "Online retail brokers saw solid growth in both trading volumes and margin loan balances and should continue to benefit from higher-for-longer rates," said Patrick Moley, an analyst at Piper Sandler.
Robinhood's assets under custody (AUC) surpassed the $100 billion mark for the second consecutive month in February. After posting a surprise profit in the final quarter of 2023, the company is aiming for profitable growth in 2024. Analysts forecast that Robinhood will report its strongest quarterly revenue since the second quarter of 2021, with a 24% rise in revenue to $548.61 million, driven by net interest revenue growth.
