Robinhood Markets saw its stock tumble approximately 10% in premarket trading on Wednesday following a first-quarter earnings report that fell short of Wall Street expectations. The online brokerage reported profit of $346 million, or 38 cents per share, missing the consensus estimate of 44 cents, while revenue of $1.07 billion also came in below analyst forecasts.
Crypto Weakness Offsets Gains in Other Segments
The primary drag on results was a sharp decline in cryptocurrency trading revenue, which plunged 47% year-over-year to $134 million. This decline offset solid gains in other transaction-based revenue streams, which rose 7% to $623 million but still missed the $728.2 million analysts had anticipated. Equities revenue climbed 46%, options revenue increased 8%, and event contracts—a newer offering—surged 320% to $147 million, helping to partially cushion the blow.
User Growth and Subscription Metrics Remain Strong
Despite the revenue miss, Robinhood continued to attract users. The company reported that total platform assets reached $307 billion, up 39% from the prior year, while net deposits hit $17.7 billion. Gold subscriptions, the company's premium membership tier, jumped 36% to a record 4.3 million subscribers. The banking arm also saw traction, surpassing $2 billion in deposits with over 125,000 funded customers.
Management Optimistic on Diversification
Chief Executive Vlad Tenev emphasized that the quarter demonstrates Robinhood's evolution into a broader financial platform. "We are increasingly positioned at the center of our customers' financial lives," Tenev said. Chief Financial Officer Shiv Verma noted that the dip in take rates was due to increased trading by active clients on tiered pricing, which naturally compresses margins. He also highlighted a strong start to April, with equity and options trading volumes pacing for the best month of the year and net deposits already reaching approximately $5 billion.
Competitive Pressures and Market Context
Analysts expressed caution about the sustainability of Robinhood's growth. Morningstar identified crypto trading as a "particular pressure point," while Raymond James analysts pointed to "retail investor exhaustion" and choppier trading volumes. The broader crypto market has been under pressure, with bitcoin falling over 30% in the past six months, according to Reuters. Meanwhile, competition is intensifying from crypto-focused exchanges and established players like Charles Schwab and E*TRADE, which KBW analysts expect to "ratchet up" rivalry.
Outlook and Capital Allocation
Robinhood raised its 2026 adjusted operating expense and share-based compensation guidance to a range of $2.7 billion to $2.825 billion, partly due to new spending on Trump Accounts—government-backed investment accounts for children. The company ended the quarter with $5 billion in cash and equivalents and repurchased $250 million worth of stock. Its board authorized a new $1.5 billion buyback program, expected to span roughly three years.
