Robinhood Delivers Big Earnings Beat Driven by Booming Crypto Trading: Analysts

As a seasoned crypto investor with a few years under my belt, I’m always keeping an eye on the latest developments in the industry. Yesterday’s earnings report from Robinhood (HOOD) was particularly noteworthy, as it highlighted the surging demand for cryptocurrency trading and the significant revenue growth this trend has brought to the platform.

Yesterday, Robinhood (HOOD), the popular trading platform, announced impressive first-quarter results. The boom in cryptocurrency trading significantly contributed to a 40% increase in year-over-year revenue. Consequently, some financial analysts have revised their earnings forecasts and raised their price targets.

KBW adjusted its price target for the stock from $20 to $21.50 while keeping its market perform rating unchanged. On the other hand, JMP lifted its price target from $28 to $30 and reaffirmed its market outperform rating. The shares ended the previous day at $17.85, and they surged by more than 4% during early trading on Thursday. This year, the stock has experienced a significant growth of over 40%.

In their report, KBW analysts, headed by Kyle Voigt, noted that a robust quarterly performance in crypto trading revenues, exceeding expectations, significantly boosted earnings per share (EPS). Additionally, lower expenses added a penny to the $0.05 beat in adjusted EBITDA.

Crypto transaction revenue more than tripled from the year-earlier quarter.

As an analyst, I’d highlight two significant insights from the recent report by KBW. Firstly, the positive feedback from clients regarding new offerings like our Gold Card was noteworthy. Secondly, I was impressed with the company’s successful expansion of its EBITDA margin.

JMP reported that the company achieved a new record in net deposits with a total of $11.2 billion, representing a 44% annualized growth rate. This increase was driven by positive inflows from all major brokerages and 75% of the deposits being contributed by clients who had been using the platform for over a year.

A widely used trading platform reported an increase of over 500,000 new accounts during the recent quarter, surpassing the total number from all of last year and marking the highest quarterly account growth since Q1 2022, according to JMP’s analysis. The positive trend persists, with a historic $5 billion in deposits made in April compared to the average monthly deposit of $3.7 billion during the first quarter.

“According to JMP analysts, headed by Devin Ryan, we can anticipate greater growth in deposits and new customers, while improvements to our Gold offerings will become more significant as well.”

Bernstein expressed his belief that Robinhood would vigorously contest the SEC’s actions and keep its cryptocurrency business unaltered in light of receiving a Wells Notice on May 4, which signaled the regulatory body’s intent to initiate an enforcement proceeding against the company.

Analysts Gautam Chhugani and Mahika Sapra anticipate that there will be ongoing interest from customers in cryptocurrency trading as we wait for regulatory clarification to develop.