Robinhood Shares Jump 13% After Strong Q4 Earnings, Crypto Revenue Surges

Robinhood (HOOD) shares soared 13% in pre-market trading on Thursday following the release of its fourth-quarter earnings, which surpassed Wall Street expectations, primarily driven by a significant increase in cryptocurrency transaction revenue.

The company reported $358 million in crypto revenue for the quarter, marking the highest contribution from digital assets in Robinhood’s history. This surge in crypto revenue was highlighted in a research report from JPMorgan (JPM) on Wednesday, which also raised its price target for Robinhood’s stock to $45 from $39 while maintaining a neutral stance. Citi (C) boosted its target to $60 from $45, also holding a neutral rating, while Bernstein raised its price target to $105 from $51 and reiterated an outperform rating.

Following the results, Robinhood’s stock climbed to $63.20 in early trading, after the earnings report was released late Wednesday. The company’s total revenue for the fourth quarter surged 115% year-over-year to $1.01 billion, exceeding analysts’ estimates of $945.8 million, based on FactSet data. Transaction-based revenue skyrocketed 200% compared to the previous year, largely driven by a 700% rise in cryptocurrency revenue.

Typically, crypto revenue accounts for around 10%-20% of Robinhood’s total revenue. However, JPMorgan noted that the 46% increase in the overall cryptocurrency market cap during the quarter, coupled with a 393% quarter-over-quarter rise in Robinhood’s crypto trading volume, helped propel the earnings beat.

Robinhood is focused on expanding its crypto business in the coming months, with plans to add more tokens, enhance its wallet offerings, introduce an order book with exchange routing functionality, integrate with Bitstamp, and explore tokenization in the long term.

Citi pointed out that the company is benefiting from favorable market conditions, including strong retail activity and crypto market momentum. However, it also cautioned investors about potential volatility and recommended waiting for a more favorable entry point, despite becoming more optimistic about Robinhood’s outlook.

Bernstein, on the other hand, highlighted Robinhood as the top pick within its global digital assets coverage. It expects strong momentum to continue in Q1, driven by crypto volatility and ongoing price cycles.