Robinhood Crypto Revenue Triples Amid SEC Crackdown

The popular millennial trading platform released its earnings report on May 8, beating analysts’ estimates.

According to its first-quarter results, Robinhood reported record revenue of $618 million, up 40% from a year earlier.

Additionally, cryptocurrency revenue rose 232% to $126 million.

“Transaction-based revenue increased 59% year-over-year to $329 million, driven primarily by cryptocurrencies,” the company said.

Robinhood’s crypto revenue tripled in the first quarter pic.twitter.com/Z6UtTWvz4C

— Jeff Roberts (@jeffjohnroberts) May 8, 2024

Record earnings for Robinhood

First-quarter net income was $157 million, or 18 cents per share. That eclipsed analysts’ average estimate of 6 cents and compared with a loss of $511 million, or 57 cents, a year earlier.

The company also fared strongly from gold-based products, with gold subscribers increasing to an all-time high of 1.7 million in the first quarter.

Vlad Tenev, CEO and co-founder of Robinhood, said: “We continued to aggressively execute on our product roadmap in the first quarter, resulting in record highs for net deposits and gold subscribers.”

Robinhood is the latest target of the US Securities and Exchange Commission’s crypto crackdown. On May 4, Wells received a notice from the regulator warning the company that it is likely to face enforcement action over its crypto business.

The regulator made the same argument it has with most enforcement actions, namely that most tokens traded on Robinhood are securities and are subject to SEC rules and registration requirements.

Tenev described the SEC’s action as a “disappointing development,” while CFO Jason Warnick said, “So it’s disappointing to see more enforcement regulation here.”

“We have managed our crypto business very carefully. We have been very selective with the coins we offer and have not offered services that have been criticized by the SEC,” Warnick continued.

“Wells’ warning clouds the future of this revenue stream,” said Lauren Ashcraft, financial services analyst at Emarketer, according to Reuters.

Shares of Robinhood ( HOOD ) gained 5.2% in after-hours trading to hit $18.60. It’s up 50% so far this year, according to MarketWatch.

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