Robinhood Trading Volume Soars 112% Year-Over-Year

Key Points:

• Robinhood’s trading volumes skyrocketed, up 65% and 112%, respectively, with a 47% jump in options contracts this quarter.
• Transaction-based revenue rose 72% to $319 million, driven by options and crypto trading growth.
• Investment expert Michael Ashley Schulman warns that net deposits fell from $13.2 billion to $10 billion, potentially impacting margins.

Robinhood trading volume increased 65% in equity volumes and 112% in cryptocurrencies traded in the latest quarter.

Robinhood Trading Volumes Skyrocket Across Assets

Equity options contracts traded rose 47%, indicating growing interest from retail investors. This heightening in activities was among the significant propellants that pushed revenues for Robinhood-essentially transaction-based-up by a whopping 72% to $319 million.

This broadened suite includes efforts to compete with established brokerages that deal with more mature investors. In October, the company added futures and index options trading features to its mobile app and launched its long-awaited desktop platform. The additions aim to capture a more significant market of investors, especially those seeking more sophisticated trading options.

Read more: Robinhood Chief Legal Officer Now Leading Candidate to Lead SEC If Trump Wins

Deposit Decline Sparks Concerns on Margins

While Robinhood trading volume significantly increased revenue, its net deposits dropped sequentially from $13.2 billion to $10 billion. Michael Ashley Schulman, chief investment officer at Running Point Capital, says the sharp decline in net deposits may hurt Robinhood’s profit margins.

The company posted a profit of 17 cents per share. Factoring in expectations, a profit of 18 cents per share was forecasted, according to estimates compiled by LSEG. Net revenue rose 36% to $637 million but missed the forecast for $657.9 million.