Commission-free brokerage firm Robinhood reported solid second-quarter earnings on Wednesday, driven by a surge in interest in meme stocks and cryptocurrencies.
The trading app, known for its appeal to retail investors, reported strong trading volumes, spurred by meme-stock influencer Keith Gill’s return to social media and renewed interest in highly shorted shares like GameStop (GME.N).
The company’s number of monthly active users reached 11.8 million, a 9% increase compared to the period ending in June 2023.
The brokerage’s transaction-based revenue surged 69% to $327 million in the quarter. Crypto revenues surged to $81 million, marking a 161% increase from the same period last year.
This figure is double the transaction revenues earned from equities this quarter. Options remained the company’s largest revenue stream.
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Robinhood CEO Vlad Tenev addressed the regulatory landscape, stating, “In the U.S., there’s plenty of work to do and we believe we can be successful regardless of what administration ultimately ends up taking power in November or if it’s the same one.”
Robinhood’s chief financial officer, Jason Warnick, added: “Regardless of kind of how the market backdrop plays out through the rest of the year, we are pretty optimistic that we are well-positioned to perform well,” Warnick said.
The platform’s digital asset “notional” trading volume rose to $21.5 billion, reflecting a 137% jump from 2023 when leading cryptocurrencies like Bitcoin and Ether were trading at lower values. However, trading volumes for the quarter were down significantly compared to $36 billion in the first quarter of this year.
In June, Robinhood acquired the cryptocurrency trading platform Bitstamp, which is described as “a globally-scaled crypto exchange, with over 50 active licenses and registrations internationally and customers across the EU, UK, US, and Asia.” The impact of the Bitstamp acquisition on Robinhood’s performance remains uncertain.
The commission-free trading app will leverage the licenses of Bitstamp to offer cryptocurrency futures to its customers in the U.S. and Europe later this year.
Despite the growing demand, Robinhood’s crypto business faces several challenges. On May 6, the company received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating potential enforcement action against its crypto arm.
