Robinhood’s Record Second Quarter: Profits Soar 652% Amid Crypto and Meme Stock Frenzy

• Robinhood’s second-quarter results beat Wall Street’s expectations.
• Earning and revenue grew thanks to increased activity in options, crypto, and equities trading, particularly meme stocks.
• However, trading volume fell on a quarterly basis.

Robinhood Second Quarter Earnings

Robinhood Markets Inc. announced on Wednesday, Aug. 7, 2024, that its revenue for the second quarter of fiscal year 2024 increased by 40% year-over-year, reaching $682 million.

The financial technology firm, known for its commission-free trading platform, experienced a significant upgrade in its net income to $188 million, resulting in diluted earnings per share of $0.21. This is a considerable improvement from the $25 million, or $0.03 per share, reported in the same quarter last year.

Robinhood’s net profit increased by a remarkable 652% compared to the $25 million from the same period last year and by 20% compared to the $157 million from the first quarter of this year.

“This quarter, we maintained our momentum with rapid product launches and a relentless commitment to delivering top value for our customers,” said  Vlad Tenev, CEO and Co-Founder of Robinhood.

Trading volume on the commission-free platform increased by 137% annually to $21.5 billion in the second quarter but decreased by 40% from the first quarter of 2024.

Robinhood’s stock in New York had fallen by 0.5% on Wednesday to $17,12. However, following the results, the shares gained 2.2% during after-hours trading to top $17.50.

What Boosted The Performance?

Robinhood’s transaction-based revenues, which include earnings from options, cryptocurrencies, and equities trading—particularly meme stocks—soared 69% year-over-year to $327 million.

Options trading remained a primary growth driver, with revenues in this segment rising 43% to $182 million. Cryptocurrency trading revenues also more than doubled, skyrocketing 161% to $81 million.

This is particularly because crypto markets have had an impressive first half of the year, driven by gains in Bitcoin following the US Securities and Exchange Commission‘s approval of exchange-traded funds to track the spot prices of Bitcoin and Ether.

Crypto regulation has also become politically relevant for the upcoming presidential election, highlighting the industry’s growing political influence.

“In the US, there’s plenty of work to do, and we believe we can be successful regardless of which administration ultimately takes power in November or if it’s the same one,” Robinhood’s CEO, Vlad Tenev, said in a call with analysts regarding the regulatory environment.

Robinhood’s Chief Financial Officer, Jason Warnick, dismissed concerns about a potential economic slowdown or recession impacting growth.

“Regardless of how the market backdrop plays out through the rest of the year, we are optimistic that we are well-positioned to perform well,” Warnick said in a call with analysts.

What Analysts Expected?

Wall Street forecasted that Robinhood’s revenue would soar by 32% to $643 million in the second quarter and set a new record for the trading platform. Analysts expected the growth to be fueled by a dramatic increase in trading volumes, with an 82% rise in April and a 76% jump in May year-over-year.

Experts particularly pointed to the renewed interest in meme stocks, driven by influencer Keith Gill, also known as ‘Roaring Kitty,’ who has boosted names like GameStop to boost Robinhood’s Q2 earnings.

Analysts also considered the crypto market’s performance to play a role due to its recent regulatory relaxations, such as the SEC’s approval of the first spot Bitcoin and Ether ETFs.

Analysts projected transaction-based revenue to jump by 51%, with estimated earnings per share (EPS) increasing to $0.15 from $0.03 a year ago, reflecting a 400% year-over-year growth.