Analysts Stay Bullish on Robinhood Despite Third Quarter Earnings Miss

Robinhood reported third quarter revenue of $1.42 billion, and its shares dropped about 10% in the hours after the release. Crypto revenue fell 55% from a year earlier to $120 million. Even so, Bernstein kept its outperform rating with a $160 price target, and StoneX held a buy rating with a $170 target.

Bernstein Sees Crypto Becoming an Infrastructure Business

Bernstein analysts led by Gautam Chhugani say the crypto unit is moving away from retail trading and toward infrastructure. They expect prediction markets, perpetual futures and Robinhood Chain, which launched in July, to bring in about 25% of total revenue by 2028. Robinhood Chain added $26 million in its first quarter on mainnet. Without it, crypto revenue slipped 6% from the second quarter to $94 million.

Stablecoin Product and Prediction Markets Drive Growth

Revenue per dollar of crypto activity fell mainly because Robinhood Earn, its stablecoin product, now holds over $500 million in assets and earns less than regular trading. Excluding Earn, revenue per dollar traded was roughly flat. Prediction markets produced $173 million in quarterly revenue, and non-sports contracts doubled their share to around 30%, led by crypto, commodities and financial contracts.