Cryptocurrency trading volumes on Robinhood experienced a significant increase in November by approximately 75% above the levels recorded in October, based on early results disclosed by the company.
However, equity trading volumes and options contracts traded in November remained relatively consistent, aligning with the levels observed in October, according to a Form 8-K filing submitted to the United States Securities and Exchange Commission (SEC) on December 4.
Robinhood Reverses Earlier Declines
The surge in crypto trading volumes signifies a reversal for Robinhood, which had reported a 55% decline in cryptocurrency notional volumes over the year in its Q3 results filing.
The boost in crypto trading activities could contribute to a more profitable fourth quarter for Robinhood. The recent rally in the crypto market, where total capitalization has surged by 40% to $1.6 trillion over the past two months, may positively impact Robinhood’s financial performance.
Robinhood’s Q3 revenue had fallen below analyst estimates, amounting to $467 million, with transaction-based revenues declining by 11% year-on-year to $185 million, primarily attributed to the decrease in crypto volumes throughout 2022.
Vlad Tenev, co-founder and CEO of Robinhood, expressed optimism during a November earnings call, suggesting that the platform could generate “nine figures” in annual revenue. Tenev also noted a renewed interest in crypto from retail investors, attributing it to the media coverage and intensity increasing as the price of Bitcoin approaches all-time highs.
Robinhood Stocks are Surging
Robinhood’s stock prices have seen an 18% increase since the beginning of 2023. However, the company’s shares have been on a downward trend since mid-July, following a peak in 2023 at just over $13. In after-hours trading, Robinhood stock is priced at $9.55, reflecting a 2.5% gain for the day at the time of writing.
Robinhood is set to launch equities in the United Kingdom markets in its expansion plans. Furthermore, the company plans to introduce a credit card offering in the coming year.
Additionally, Robinhood aims to introduce futures trading in 2024, subject to regulatory approval, which will be its third attempt to establish its presence in the UK. The Financial Conduct Authority (FCA), the UK markets regulator, has previously expressed concerns about the risks associated with gamifying investing, a criticism often directed at the Robinhood platform.
Despite these product rollouts, Wall Street’s response to Robinhood’s stock has been lukewarm. JP Morgan analyst Ken Worthington noted concerns about the sustainability of the company’s growth, citing a focus on small accounts with limited profitability potential. However, there is optimism about Robinhood’s expected move to profitability in 2024, which is seen as positive and sustainable as long as interest rates remain elevated.