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Robinhood Markets’ unexpected surge in cryptocurrency revenue helped its third-quarter results beat Wall Street expectations.
During the three months ended September 30,The company’s total revenue rose to $1.27 billion, double the same period last year and higher than analysts’ expectations of $1.2 billion..
Cryptocurrency trading generated nearly $270 million in revenue during the quarter, an increase of more than 300% from a year earlier, the company said.
Trading revenue overall rose nearly 130% to $730 million, and earnings per share rose nearly 260% to $0.61, beating analysts’ forecasts of $0.51.
The data shows how much volatility in cryptocurrency trading can impact Robinhood’s quarterly results.
New business lines are starting to play an important role.Robinhood CFO Jason Warnick told investors,Bitstamp, which the company acquired in June, and its prediction markets could bring in about $100 million or more annually..This revenue has been incorporated into the company’s growth plans.
Originally known for its free stock trading, the company has now expanded its product line.The company currently offers tokenized versions of stocks and prediction market trading, and completing the acquisition of Bitstamp is part of this strategic move.
The report shows that executives believe there is room for the global prediction market to expand, but they said the specific rollout will depend on local rules.
CEO Vladimir Tenev also discussed how tokenized stock issuance currently works and how it may change in the future.
He said the products were “less interoperable than we expected” because they have not yet been deployed to decentralized finance (DeFi) platforms,ButHe expects interoperability to improve over time as developers build bridges and wrappers.
He believes this path could make tokenized assets easier to transfer between networks and services.
On the day the report was released, Robinhood shares rose 4% to $142 in regular trading, but fell back below $140 after the market closed.
The stock has gained more than 280% year-to-date and reached an all-time high of $152 on October 9, but a subsequent sell-off in the cryptocurrency market caused its gains to cool.
The data gave investors mixed feelings.Strong revenue growth is evident, but the business is closely tied to cryptocurrency trading volumes, which are volatile.
Revenues from emerging sectors like Bitstamp and prediction markets are becoming substantial, but regulators and market fluctuations could quickly change that.
Analysts will be closely watching whether cryptocurrency revenues can remain at high levels and how regulators will respond to the expanding number of equity token offerings.
So far, Robinhood’s transformation into cryptocurrencies and related services has been reflected in its performance.
The company has reported significant growth, driven largely by users trading cryptocurrencies and several recent acquisitions or launches that have generated significant revenue.
