Robinhood Shares Slide on Q3 Profit Miss Despite Crypto Revenue Beat

Shares of Robinhood (HOOD) dropped almost 4% in post-market trading Tuesday after the trading platform posted third-quarter earnings of 51 cents per share, below the 56 cents analysts had anticipated. Cryptocurrency revenue exceeded forecasts but was not enough to halt the stock's decline.

The after-hours move erased a 1.85% gain from the regular session, during which the stock closed at $94.56. By 4:11 p.m. ET, shares were trading at $90.90, a $3.66 per-share loss for those holding into Wednesday.

Why Did Robinhood Miss Profit Estimates?

Revenue increased 12% year over year to a record $1.42 billion, according to the company's results, compared with the $1.44 billion that Wall Street had predicted. Net income dropped 14% to $476 million.

Approximately 7 cents of the per-share figure was removed by a $67 million unrealized loss on Robinhood Ventures Fund I, a fund that holds stakes in private companies and is revalued every quarter.

Operating expenses also rose 16% to $739 million.

Is the Crypto Beat as Strong as It Looks?

Crypto revenue reached $120 million, ahead of the roughly $114 million analysts had forecast and up from $100 million in the second quarter. However, it was still 55% lower than a year earlier, as crypto trading volumes on the platform slumped 38% to $50 billion.

Event contracts, which allow users to take binary positions on outcomes such as economic data or sports results, generated higher revenue. That segment brought in $173 million, more than six times its year-ago level.

Chief executive Vlad Tenev has said crypto contracts could overtake sports as the category's biggest driver.

Rothera, the exchange that Robinhood operates with trading firm Susquehanna International Group and that is regulated by the Commodity Futures Trading Commission (CFTC), surpassed $100 million in annualized revenue in its first full quarter.

Bernstein had forecast roughly $1.5 billion in quarterly revenue while holding a $160 price target.

What Could Steady the Stock Before Wednesday’s Open?

Paying subscribers to Robinhood Gold rose 34% to a record 5.2 million. Customers added $15.7 billion in net deposits during the quarter.

“And we’re entering Q4 with strong momentum, as October Net Deposits have already topped $13 billion month-to-date,” according to the release, quoting Robinhood CFO Shiv Verma.

That October figure includes a $6 billion contribution from the Dell family to Trump Accounts, which Robinhood services.

Robinhood’s revenue now leans more heavily on options—up 31% to $399 million—and event contracts. This mix brings its own exposure, as the city of Baltimore has sued prediction market operators over sports contracts.

Wednesday’s trading will show how much importance investors place on the new revenue composition compared with a quarter of declining profit.