Robinhood Markets has turned a corner with its second consecutive quarterly profit, topping Wall Street estimates with a boost from higher interest rates and vibrant cryptocurrency trading.
The discount broker announced a net income of $157 million, or 18 cents per share, far surpassing the 6 cents forecast by analysts surveyed by Bloomberg and marking a strong recovery from last year’s $511 million loss.
In after-hours trading, Robinhood’s shares climbed more than 5% as investors responded warmly to the robust first-quarter results. This performance is a sharp reversal from the same period last year when the brokerage reported a loss of 57 cents per share.
Robinhood’s total revenue for the quarter was $618 million, which also exceeded Wall Street’s expectations of $549 million. The results reflect record highs for both earnings per share and revenue, indicating strong operational momentum.
During the pandemic, Robinhood saw a surge in trading volumes as more individuals took to trading stocks and cryptocurrencies from home. The recent uplift in market activities, particularly in stocks and cryptocurrencies, likely played a major role in fueling Robinhood’s turnover this quarter.
However, it’s not all smooth sailing; Robinhood faces regulatory challenges ahead. The brokerage received a Wells Notice from the U.S. Securities and Exchange Commission. The notice, which popped up on May 4, doesn’t mean Robinhood did anything wrong, but it shows the SEC might be gearing up to take action.
However, Robinhood’s chief legal officer defended the company’s stance in a blog post, asserting that the crypto assets offered are not securities.
The trading platform also reported growth in its user base, with the number of funded accounts climbing by 810,000 year-over-year to 23.9 million. Additionally, Robinhood’s assets under management have surged by 65% from the previous year to $129.6 billion.
This financial turnaround precedes an almost 40% rise in Robinhood’s stock year-to-date, a bullish signal from investors who are optimistic about the company’s trajectory amid fluctuating market conditions and regulatory scrutiny.
