Robinhood Records 224% Increase in Crypto Trading Amid Regulatory Scrutiny
Summary:
Robinhood reported a 224% rise in Q1's crypto trading volumes, contributing to 40% of their transaction-based revenue of $329 million and net income of $157 million. However, the firm simultaneously received a Wells notice from the US securities regulator questioning the crypto listings and custodian operations. Despite regulatory scrutiny, Robinhood's Q1 revenue of $618 million beat estimates, leading to a share price rise of 44.3% YTD. The firm also holds $26.2 billion in user crypto assets, up by 78% from the last quarter.
CEO of Robinhood, Vladimir Tenev, expressed disappointment over the recent Securities and Exchange Commission Wells notice during their Q1 earnings report. Meanwhile, the firm reported a leap of 224% in their crypto trading volumes to $36 billion for this period. Crypto services at Robinhood accounted for nearly 40% of the transaction-based revenue of $329 million. This led the company to achieve its second consecutive profitable quarter, recording a net income of $157 million. However, these impressive figures coincide with the Wells notice received from the US securities regulator, which has raised questions about Robinhood’s crypto listings and custodial services. Tenev referred to this regulatory focus as a "disappointing development". Jason Warnick, the company's CFO, emphasized that they handle their crypto ventures with the same legal and compliance standards as their brokerage business, despite the regulation criticism. He assured that the customer accounts remain unaffected by this situation. Tenev added, "We’re committed to defending our firm and continuing to champion our customers”. Despite the challenge, Robinhood’s Q1 performance exceeded industry projections, recording revenue of $618 million which surpassed an estimate by investment research company Zacks of $534.5 million by 15.6%. In response, Robinhood’s shares climbed as high as 7.3% to $19.15 during after-market trading, although later settling to $18.55 as per Google Finance. The company’s share price has risen 44.3% so far this year. Robinhood reported holding $26.2 billion in crypto for its users, an increase of 78% from the previous quarter. This substantial uptick may be partially due to rising market prices including Bitcoin's 65.1% surge to $69,700 over the said quarter. Robinhood first introduced cryptocurrency trading featuring Bitcoin and Ethereum in February 2018 in several states. It has since broadened its crypto options to include Litecoin, Uniswap, Avalanche, Chainlink, and others.
Published At
5/9/2024 3:06:41 AM
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