New York — Robinhood shares surged nearly 16% in premarket trading on Thursday after the trading platform reported record fourth-quarter revenue and profit on a resurgence in retail trading.
Retail trading rebounded significantly in 2024 as bitcoin and US stocks reached all-time highs, driven by optimism over easing regulatory hurdles for digital assets and expectations of a soft landing for the economy.
The Menlo Park, California-based company blew past Wall Street expectations for quarterly earnings, with transaction-based revenue more than tripling.
“The year of 2024 was a near-perfect environment for retail trading," analysts at JPMorgan said, adding that Robinhood’s expense discipline and introduction of new products are translating into higher profits.
Long dominated by high-profile names such as Vanguard, Charles Schwab and Fidelity Investments, the US brokerage industry was disrupted when Robinhood pioneered commission-free trading in 2013.
A decade on, Robinhood is expanding to cater to more seasoned investors and capture market share from incumbents.
If premarket gains hold, the company will add roughly $8bn to its market capitalisation.
‘Trump bump’
Animal spirits took over the crypto sector in November after Donald Trump secured a second term in the White House.
His pledge to make the US the “crypto capital of the universe" and his pro-industry stance propelled bitcoin past $100,000 for the first time, igniting a broad rally across the market.
“Trading volumes in equities, options and crypto surged in the fourth quarter, which is a sign that retail traders have confidence in all risk markets across the board," said Paul Marino, chief revenue officer at Themes ETFs.
Robinhood’s transaction-based revenue from crypto trading surged more than eightfold in the fourth quarter to $358m.
“Its hard to predict when the transaction revenue will end, but perhaps the long historical investment norm of buy and hold has retired with the baby boomers," Marino added.
Reuters
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