Robinhood Markets (HOOD) stock fell to its lowest level since August after the company released earnings showing that crypto revenue continued to decline. The shares dropped to $89.20, roughly 30% below their September peak. Despite the weakness, there are reasons to expect the stock to recover over time.
Robinhood revenue growth continued despite crypto weakness
One reason why HOOD stock may bounce back soon is the fact that its revenue growth continued, even as its crypto business weakened. The revenue rose by 12% to $1.42 billion, with its transaction figure rising by 19% to $867 million. This growth was driven by its event contracts, options, and equities.
Robinhood’s revenue growth was offset by the deterioration of its crypto business and its net interest segment. Analysts now expect that the company’s revenue will continue growing in the foreseeable future. The average estimate among analysts is that its annual revenue will jump by 19% to $5.32 billion. It will then grow by 28.8% next year to $6.86 billion.
Robinhood’s revenue growth will accelerate if the crypto business rebounds. It will also continue growing because of its recently launched products, including its event contracts, Robinhood Chain, and its tokenized stocks offerings. Its Trump Accounts business will also continue growing.
Robinhood continued its share buybacks
HOOD stock will also bounce back, helped by its share buybacks. The company used its strong balance sheet to reduce its outstanding shares. It repurchased shares worth $25 million in the last quarter, bringing its cumulative repurchases to $1.3 billion. The average purchase price is $48, meaning that the buying has already been profitable.
Share repurchases are usually bullish because they reduce the outstanding shares, which ultimately boosts the earnings per share.
Robinhood has continued to innovate
Additionally, there are signs that Robinhood has become one of the most innovative companies in the fintech services. It has launched a prediction market solution that has become highly popular. Rothera, its joint venture with Susquehanna, has already achieved over $100 million in annualized revenue.
The company also launched Robinhood Chain, which has become one of the biggest chains in the crypto industry. It has achieved a total value locked of over $1.3 billion, much higher than traditional chains like Cardano and Algorand, combined. It also has $1.06 billion in stablecoins, and has already made over $47 million in fees since its inception.
Robinhood is now working on introducing a solution to enable stocks trading on a 24/7 basis, a move that will lead to more transaction revenue over time. In line with this, it has introduced agentic trading, a solution that has already handled over $1 billion in volume.
All these solutions have led to a surge in the number of users and assets. It ended the quarter with 1.3 million Gold subscribers and over 28.7 million funded customers. The amount of assets in its platform continued rising, reaching $396 billion from $333 billion in the same period last year.
Therefore, while Robinhood is going through challenges, chances are that its business will continue thriving in the long term.
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