Shares of Robinhood rose in extended trading after the retail brokerage announced stronger-than-expected first-quarter results. The company reported a net income of $157 million, or 18 cents per share, a positive swing from the same period last year when the company had a net loss of $511 million. Robinhood’s earnings per share and revenue numbers were both records for the firm, with earnings per share coming in at 18 cents compared to the 6 cents expected by Wall Street analysts, and revenue at $618 million compared to the expected $549 million. The stock jumped more than 5% in after-hours trading as a result.
Robinhood experienced a surge in popularity during the Covid-19 pandemic in 2020 and 2021, but has since seen user activity and revenue that mirrors the broader market. The rise in stocks and cryptocurrencies during the first quarter likely contributed to the company’s strong results. Cryptocurrency transactions accounted for $126 million in revenue for the quarter, but regulatory uncertainty looms over this business segment. The U.S. Securities and Exchange Commission issued a Wells Notice to Robinhood, signaling potential legal enforcement action over the company’s cryptocurrency business. Despite this, Robinhood maintains that the crypto assets on its platform are not legally securities.
The number of funded customers for Robinhood rose by 810,000 year over year to 23.9 million, and assets under custody increased by 65% year over year to $129.6 billion. Shares of Robinhood had already risen nearly 40% year to date before the earnings announcement, indicating positive investor sentiment. The company’s chief legal, compliance, and corporate affairs officer expressed disappointment in the SEC’s decision and reiterated the company’s belief that the crypto assets on its platform are not considered securities.
Overall, Robinhood’s stronger-than-expected first-quarter results, driven by record earnings per share and revenue numbers, have led to a positive response from investors. The company’s growth in funded customers and assets under custody also demonstrates continued interest in its services. While regulatory uncertainty surrounding its cryptocurrency business remains a concern, Robinhood remains confident in its legal stance. Shares of Robinhood rose after the earnings announcement, indicating optimism among investors about the company’s financial performance.
