- Robinhood exceeded Wall Street expectations in the second quarter, reporting a net income of $188 million and total revenue of $682 million, driven by surging trading volumes in meme stocks and cryptocurrencies.
- Transaction-based revenues rose 69% to $327 million, with cryptocurrency revenues up 161% and equities revenues up 60%.
OUR TAKE
Robinhood’s robust Q2 performance highlights the enduring appeal of meme stocks and cryptocurrencies among retail investors. The surge in trading volumes and impressive revenue growth underscore the platform’s resilience amidst regulatory uncertainties and potential market fluctuations. The company’s strategic moves and positive outlook bode well for its future in a rapidly evolving sector.
–Vicky Wu, BTW reporter
What happened
Robinhood reported second-quarter earnings that surpassed Wall Street expectations, fuelled by a surge in trading volumes for meme stocks and cryptocurrencies. The online brokerage announced a net income of $188 million, or 21 cents per share, compared to $25 million, or 3 cents per share, in the same period last year. Revenue witnessed a 40% year-over-year increase. Total revenue for the quarter reached a record $682 million, exceeding forecasts of $643.34 million. Earnings per share came in at 21 cents, above the expected 15 cents.
Transaction-based revenues experienced a 69% rise to $327 million, primarily due to increased options activity. Cryptocurrency-related revenues soared by 161%, while equities revenues climbed 60%. The company maintained its full-year outlook for operating costs.
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Why it’s important
This quarter’s performance underscores the resurgence of meme stocks, particularly after the return of influencer Keith Gill, known as Roaring Kitty, who rekindled interest in heavily shorted stocks such as GameStop. Additionally, the US Securities and Exchange Commission (SEC) approved exchange-traded funds tracking spot prices of Bitcoin and Ether, contributing to a strong first half of the year for the cryptocurrency market. Despite the SEC maintains its stance that many crypto tokens should be classified as securities and fall under its jurisdiction, Robinhood has managed to navigate regulatory challenges and continue its growth trajectory.
The contentious issue of crypto regulation has taken centre stage in the upcoming presidential election, reflecting the growing political clout of the industry. During a call with analysts, Robinhood’s CEO, Vlad Tenev, commented, “In the U.S., there’s plenty of work to do and we believe we can be successful regardless of what administration ultimately ends up taking power in November or if it’s the same one.”
Robinhood’s Chief Financial Officer, Jason Warnick, downplayed concerns about a potential economic downturn or recession affecting the company’s growth. Speaking to reporters, he stated, “Regardless of kind of how the market backdrop plays out through the rest of the year, we are pretty optimistic that we are well-positioned to perform well.”
