Robinhood shares surge as crypto market frenzy fuels record results

(Reuters) – Robinhood (HOOD) shares surged nearly 16% in premarket trading on Thursday, after the trading platform reported record fourth-quarter revenue and profit on the back of a resurgence in retail trading due to renewed interest in crypto and equity markets.

Retail trading rebounded significantly in 2024 as Bitcoin and U.S. stocks hit all-time highs, driven by optimism over easing regulatory hurdles for digital assets and expectations of a soft landing for the economy.

The Menlo Park, California-based company blew past Wall Street expectations for quarterly earnings, with transaction-based revenue more than tripling.

“The year of 2024 was a near-perfect environment for retail trading,” analysts at J.P. Morgan said, adding that Robinhood’s expense discipline and introduction of new products are translating into higher profits.

Long dominated by high-profile names such as Vanguard, Charles Schwab and Fidelity Investments, the U.S. brokerage industry was disrupted when Robinhood pioneered commission-free trading in 2013.

A decade on, Robinhood is expanding to cater to more seasoned investors and capture market share from industry incumbents.

If premarket gains hold, the company will add roughly $8 billion to its market capitalization.

Animal spirits took over the crypto sector in November after Donald Trump secured a second term in the White House.

His pledge to make the U.S. the “crypto capital of the universe” and his pro-industry stance propelled Bitcoin past $100,000 for the first time, igniting a broad rally across the market.

“Trading volumes in equities, options and crypto surged in the fourth quarter, which is a sign that retail traders have confidence in all risk markets across the board,” said Paul Marino, Chief Revenue Officer at Themes ETFs.

Robinhood’s transaction-based revenue from crypto trading surged over 700% in the fourth quarter to $358 million.

“Its hard to predict when the transaction revenue will end, but perhaps the long historical investment norm of buy and hold has retired with the baby boomers,” Marino added.

(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)

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