By Robinhood stock jumped as much as 20% on Thursday, extending its year-to-date gain to 70% and its one-year gain to 440%.
It’s a stunning move for the stock as retail traders flocked back to stocks and crypto after many were burned in the bear market of 2022. In the depths of the 2022 plunge, Robinhood shares were down as much as 83% from their IPO price.
Investors on Thursday cheered the company’s fourth-quarter earnings report, which blew past analyst estimates.
The stock traded at $62.87 around midday, representing the highest level since August 2021, shortly after the company went public.
The company reported fourth-quarter earnings results that smashed analyst expectations, delivering year-over-year revenue growth of 114%, and adjusted earnings per share of $1.01, more than double what analysts expected.
Fueling the rise in the company's underlying business was a surge of nearly 2 million funded accounts on the platform in the past year.
Meanwhile, a boom in crypto trading activity helped drive the strong results in the quarter. Robinhood recorded $358 million in cryptocurrency revenue in the last three months of the year, representing a 700% year-over-year increase.
The rise in Robinhood's crypto trade activity goes hand-in-hand with the upswell of crypto bullishness that followed Donald Trump's election victory, which helped drive bitcoin to $100,000 for the first time in December.
Crypto transaction revenue of $358 million represented about 35% of Robinhood's revenue during the quarter, the highest contribution ever. In the past, crypto trading typically contributed 10%-20% of total revenue, according to data from JPMorgan.
On the earnings call, Robinhood signaled that there's still room to grow its crypto offerings, including adding more tradeable tokens, integrating its recent acquisition of Bitstamp, and strengthening its wallet offering.
Options trading also surged in the quarter, up 61% year-over-year and up 8% quarter-over-quarter. The options-trading activity, like the crypto trading activity, signals a rise of risk-on trading among retail investors.
The brokerage app in the fourth quarter also unveiled Robinhood Legend, a desktop trading tool that offers users more robust charting and screening tools.
Analysts at JPMorgan highlighted the maturing nature of the Robinhood platform, evidenced in its rising profitability.
"Products that Robinhood has been rolling out are generating revenue with little incremental expenses evidencing the inherent operating leverage in its brokerage business," analysts at JPMorgan said.
Meanwhile, Goldman Sachs said the trading platform should grow even more popular with investors as it ramps up its marketing efforts.
"Looking ahead, the company expects to continue rolling out new products, gaining market share and expanding globally, and plans to increase 2025 marketing expenses by ~$100mn, which should support strong account growth," analysts at Goldman Sachs said.
JPMorgan rates Robinhood at "Neutral," while Goldman Sachs has a "Buy" rating for the stock.
