Robinhood Shares Surge 13% After Q4 Earnings Beat, Fueled by Crypto Revenue
Robinhood (HOOD) shares saw a 13% jump in pre-market trading Thursday following the release of its fourth-quarter earnings, which surpassed Wall Street estimates, primarily driven by a massive surge in crypto transaction revenue.
The company reported a record $358 million in crypto transaction revenue for the quarter, marking the largest contribution from digital asset trading to date, according to JPMorgan (JPM) in a report released Wednesday. Following the strong earnings, JPMorgan raised its price target for Robinhood shares from $39 to $45 while maintaining its neutral rating. Citi (C) increased its target to $60 from $45, also keeping a neutral stance. Meanwhile, Bernstein significantly raised its price target to $105 from $51, maintaining an outperform rating on the stock.
Robinhood’s stock jumped to $63.20 in early Thursday trading after the results, which were released after the market close on Wednesday. For Q4, the company reported $1.01 billion in revenue, up 115% from the previous year, beating analysts’ consensus estimate of $945.8 million, according to FactSet data. Transaction-based revenue surged 200% year-on-year, driven by an extraordinary 700% increase in cryptocurrency revenue.
While crypto revenue generally contributes 10%-20% of Robinhood’s total revenue, JPMorgan highlighted that the 46% increase in the overall cryptocurrency market cap during the period, along with Robinhood’s 393% jump in crypto volume quarter-on-quarter, contributed significantly to the revenue outperformance.
Robinhood has ambitious plans for its crypto operations, aiming to expand its token offerings, improve its wallet services, integrate Bitstamp, and explore tokenization over the long term. The company is also planning to introduce an order book with exchange routing functionality.
According to Citi, Robinhood has been benefiting from favorable market conditions this year, with strong crypto market trends and retail activity. However, while the bank is more optimistic about Robinhood’s outlook, it suggests waiting for a more attractive entry point due to potential volatility.
Bernstein remains highly bullish on Robinhood, calling it the top pick within its global digital asset coverage. The firm expects continued momentum in Q1, driven by crypto market volatility and a sustained price cycle.
