Robinhood is thriving on digital assets.
Crypto trades accounted for half the company’s transaction based revenues of $672 million in the fourth quarter, a 700% jump, according to annual results released on Wednesday.
The performance contributed to a 58% jump in Robinhood’s net total revenue of $2.9 billion in 2024. Crypto also helped the brokerage record net income of $1.4 billion.
“We can be a major player,” Johann Kerbrat, the trading app’s crypto boss, told DL News in January.
Rivals circling
Robinhood’s boffo performance hits as President Donald Trump relaxes regulations on the industry and Congress moves to pass landmark legislation around stablecoins.
Robinhood’s shares have skyrocketed 365% in the last 12 months, trouncing the 85% jump for Bitcoin.
On Thursday, Bernstein, the market research firm, forecasted that Robinhood’s shares would about double in price by 2026.
“We are further moving up our 2025E and 2026E estimates, led by crypto growth strategy and upgrading our price target to $105,” Bernstein wrote.
Even though the 12-year-old company changed the way people invest by offering zero-commission trades, its crypto franchise will face stiffening competition in the year to come.
Coinbase, the top crypto exchange in the US, is also flexing during this historic bull run.
Analysts expect the company to report an 80% jump in revenue and a 57% increase in its earnings per share for 2024 when the company releases its results on Thursday.
At the same time, Revolut, the UK-based fintech powerhouse, is expanding its crypto offerings to its 45 million customers with 210 “vetted tokens” and crypto payment card.
The company, which recently obtained a British banking licence, sports a valuation of $45 billion.
That’s within shouting distance of Robinhood’s $49 billion market capitalisation and Revolut has yet to go public.
Crypto surge
Even so, Robinhood’s early adoption of crypto is clearly paying off now as crypto morphs into a mainstream asset class.
“The past few weeks have been crazy,” Kerbrat said in January.
Following Trump’s election on November 5, the notional value of Robinhood’s crypto trading volume surged 530%, to $35 billion, which was six times the level of the prior month.
The volume has cooled since then, but just a little.
The takeaway is plainly evident — crypto has become a growth engine for the Silicon Valley venture, which has 25 million customers.
Over the past two years, the firm strengthened its crypto team, rolled out crypto trading services in Europe, and launched a stablecoin together with Kraken and Galaxy Digital.
Analysts expect Robinhood to benefit in Trump’s second term.
In a January note to investors, Morgan Stanley said a more favourable US regulatory regime will empower Robinhood to “participate more aggressively,” and unlock more crypto revenue.
Robinhood’s efforts to add new crypto tokens will “accelerate” if the Trump administration delivers on its promise of regulatory clarity, co-founder and CEO Vlad Tenev said during the company’s earnings call Wednesday.
New legislation
But he’s most excited about the possibility that new legislation will enable tokenisation of traditional securities such as stocks, a potential development championed by Wall Street executives including BlackRock CEO Larry Fink.
“What that means for us is bringing real assets onto crypto technology,” Tenev said, echoing an argument he made in a January Wall Street Journal opinion piece.
“Equities, private investments and more should be brought onto crypto technology to really unleash the true power of the crypto revolution.”
It’s unlikely that the industry will receive the legislation it wants anytime soon. But Kerbrat said he’s optimistic that Trump will stop Washington’s push to “regulate it to death.”
Indeed, the end to the crackdown has already begun.
This week, the Securities and Exchange Commission asked a court for a 60-day pause in its lawsuit against Binance as a new task force evaluated crypto regulation.
Robinhood has also felt the SEC’s scrutiny.
In May, the agency notified the company that it planned to bring enforcement actions against the fintech for violating securities laws. Robinhood disputed the allegation.
In January, Robinhood settled a separate SEC case pertaining to other alleged security law violations by paying a $45 million fine.
Bitstamp deal
With improved regulatory clarity, Robinhood plans to try and expand its customer base from retail investors to institutions. To that end, the company is in the midst of acquiring Bitstamp, a crypto exchange, for $200 million.
The deal will enable Robinhood to absorb Bitstamp’s institutional clients, including neobanks, hedge funds, and family offices.
Robinhood plans to maintain Bitstamp as a separate business, and create synergies between the two firms for advanced retail traders, Kerbrat said.
For instance, Robinhood’s advanced crypto traders may get access to Bitstamp lending or staking services, he said.
Robinhood doesn’t plan to pursue institutional investors on its own business, but has several services aimed at professional traders, Kerbrat said.
Those include Robinhood Connect, launched in 2023; the Robinhood Crypto Trading API, launched in May to give advanced traders access to “advanced and automated trading strategies;” and Robinhood Legend, which features crypto analytics tools for advanced traders.
Fintech crypto race
The pressure is mounting for other fintech players ranging from PayPal to Stripe to eToro, another online brokerage and crypto pioneer that filed for a US IPO in January, to expand their own crypto platforms.
Nicklas Nilsson, an analyst GlobalData, said crypto provides a potent means for attracting younger investors as they accumulate wealth.
Failure to develop blockchain-based capabilities will probably lead to lost market share, Nilsson told DL News.
And it isn’t just newbies they’re targeting. Last year, Revolut launched Revolut X, a platform dedicated to professional crypto traders that directly competes with Robinhood Legend, launched in October.
“We will see increasingly sophisticated crypto products from fintechs,” Nilsson said.
If its 2024 results are anything to go by, Robinhood is in the thick of the race.
Eric Johansson is DL News’ News Editor. Aleks Gilbert is a DeFi Correspondent at DL news. Got a tip? Email them at [email protected] or [email protected].
