Robinhood Markets Inc. (HOOD) shares fell more than 8 percent in post-market trading after its first-quarter results missed Wall Street estimates, hurt by a 47 percent plunge in cryptocurrency revenue.
"I want to get away from talking about the price of bitcoin,” CEO Vlad Tenev said on the company's earnings call, adding that Robinhood is focused on using crypto technology as “infrastructure” for financial services.
The trading platform reported total revenue of $1.07 billion, a 15 percent year-over-year increase but short of the $1.14 billion consensus. Adjusted earnings per share of $0.38 also narrowly missed the $0.39 analyst forecast. While the company remained profitable with net income rising 3 percent to $346 million, the miss on the top and bottom lines was driven by its crypto segment.
The results highlight a strategic pivot for the company as it works to reduce its dependence on volatile crypto trading. A record-breaking surge in prediction market trading, which lifted “other transaction revenue” by 320 percent to $147 million, partially offset the crypto decline. Users traded 8.8 billion event contracts during the quarter.
The crypto-related revenue decline to $134 million from $252 million a year earlier marked the third straight quarter of falling revenue for the segment. The decline also appeared to weigh on shares of crypto exchange Coinbase (COIN), which fell about 1 percent in sympathy. Robinhood noted that trading volumes from its recently acquired Bitstamp exchange, which totaled $42 billion in the quarter, were not included in its consolidated crypto metrics.
The sharp decline in its crypto business puts pressure on Robinhood to prove its diversification strategy can create more stable growth. Investors will watch the upcoming Q2 results to see if the record-breaking strength in prediction markets can be sustained and offset crypto volatility.
This article is for informational purposes only and does not constitute investment advice.
