Robinhood Stock Falls After Record Quarter as Crypto Revenue Drops 55% and Prediction Markets Take Over

Robinhood just had its biggest quarter ever for revenue, and the stock still fell. The reason is crypto: Robinhood's crypto revenue dropped 55% from a year ago, and earnings came in below what Wall Street expected. Meanwhile, a newer business, prediction markets, made more money than crypto did. Here's what the numbers say, in plain English.

The numbers

Robinhood reported its third-quarter results (July to September) after the market closed on Tuesday, October 27:

• Total revenue: a record $1.42 billion, up 12% from a year ago.
• Earnings per share: $0.51, down 16% from a year ago and below the roughly $0.55 analysts expected.
• Crypto revenue: $120 million, down 55% from about $267 million a year earlier. That's actually slightly better than the roughly $114 million analysts expected, but it's still a huge drop.
• Crypto trading volume: down 38% to about $50 billion.
• Prediction markets: $173 million, more than six times the same quarter last year.
• Options revenue: up 31% to $399 million. Stock trading revenue: up 41% to $121 million.
• Funded customers: 28.7 million, up 7%. Robinhood Gold subscribers: a record 5.2 million, up 34%.
• Total platform assets: $396 billion, up 19%.

Why the stock fell

Shares dropped after the report, with early trading on Wednesday showing a fall of around 7% to 8%. Two things stood out to investors:

• Profit missed. Revenue hit a record, but earnings per share came in below forecasts. Robinhood also booked a $67 million unrealized loss, mostly tied to its venture fund.
• Crypto is cooling. A year ago, crypto made up about a fifth of Robinhood's revenue. Now it's about 8%. With Bitcoin on track for a second losing October in a row and hovering around $80,000, fewer people are trading coins.

Prediction markets are now bigger than crypto

This is the most interesting part. Prediction markets, where users trade contracts on things like sports results, elections and economic data, brought in $173 million this quarter. That's more than Robinhood made from crypto. A year ago this business barely existed; now it's one of the company's fastest-growing products.

It's a sign of where retail traders' money is moving. When crypto goes quiet, people don't stop trading, they just find something else to trade.

What it means for crypto

Robinhood is one of the biggest on-ramps for regular people buying crypto, so its numbers are a decent mood check for the market. A 38% drop in crypto trading volume says retail interest is much lower than last year. If you want the bigger picture on Bitcoin right now, read our article on Bitcoin before the Fed meeting. And if you're curious about trading stocks on-chain instead of through a broker, we covered FLING Stocks on Monad.

What's next

• The Fed decision comes today, October 28, at 2 p.m. ET. Markets expect rates to stay at 3.75% to 4%.
• Microsoft and Alphabet report earnings after the market closes today.
• Robinhood's CFO said deposits were already over $13 billion in October so far, so money is still flowing into the app even while crypto is slow.

My take

Record revenue and the stock still drops: that's the market for you. But the bigger story is the shift. Crypto went from a fifth of Robinhood's business to under a tenth in one year, and betting on events took its place. Crypto trading comes in waves, so this could flip fast if Bitcoin runs again. Do you think prediction markets are here to stay, or is this just the new hype?