Robinhood’s revenue growth could have a positive impact on Coinbase’s earnings

14.02.2024

Popular cryptocurrency trading platform Robinhood (HOOD) reported that its crypto revenue rose 10% year-over-year to $43 million in the fourth quarter as more users trade cryptocurrencies. This could bode well for cryptocurrency trading platform Coinbase (COIN), where trading volume is one of the key drivers of revenue.

In its presentation, the company said that notional cryptocurrency trading volume grew 89% quarter-on-quarter thanks to more customers transacting higher amounts.

The rise in volume is not unexpected, as prices in the digital asset market rose amid optimism that spot bitcoin exchange-traded funds (ETFs) would be approved in the US (which happened in January).

Robinhood said its transaction revenues for the quarter rose 8% year-on-year, mainly driven by cryptocurrency trading. Coinbase will report its earnings on Thursday and could see similar results in terms of trading volume – all other things being equal. COIN stock rose slightly in Tuesday’s post-market trading.

Robinhood also expects to gain a larger share of the cryptocurrency market this year and expand internationally. Most recently, the company began allowing customers in the European Union to trade cryptocurrencies on its platform.

“2023 was a strong year as the speed of our product development continued to grow, our trading market share increased, and we began to expand globally,” said Vlad Tenev, CEO and co-founder of Robinhood, in a statement. “We are off to an even better start in 2024: we have already attracted more customers and net deposits in the first half of the first quarter than we did in the entire fourth quarter of 2023,” he added.

The trading platform also reported that its total revenue for the fourth quarter was $471 million, beating analysts’ average estimate of $454.7 million, according to FactSet. Earnings per share came in at $0.03, beating estimates of $0.01 per share.

The company’s stock rose about 15% Tuesday after the results were released. For the year, the stock is down nearly 7% compared with the S&P 500’s 4.4% gain.