Robinhood Markets shares ended August 21% higher, building on a strong second-quarter earnings report and a mid-month rally in cryptocurrencies. Prediction markets, run in partnership with Kalshi, also emerged as a bigger revenue source than crypto trading fees.
Robinhood Markets shares ended August 21% higher, extending a rally that began right after the company published its second-quarter results. The gain was fueled first by those results, then by a rally in crypto prices.
Second-quarter results beat estimates
Robinhood's second-quarter revenue rose 32% year over year to over $1.3 billion. Net profit surged 45% to $561 million. Both figures topped average analyst estimates.
One weak spot in that report was crypto-related revenue: transaction-based income from cryptocurrencies sank 38% to $100 million. However, that weakness didn't last.
Crypto rally erases the worry
Cryptocurrencies staged a sustained rally just after mid-August, easing concerns from the earnings report. The Treasury Department's promise to double the size of its regular long-term government bond repurchases helped ignite the move.
President Trump's push for Congress to pass the CLARITY Act, which would set a regulatory framework for the crypto industry, also contributed. Rising crypto prices drew more investors into digital coins and tokens, and Robinhood is one of the brokerages most active in crypto trading, so the stock tracked crypto's gains.
Prediction markets outgrow crypto fees
Robinhood has also pushed into prediction markets, offering them in collaboration with Kalshi across a wide range of events. In the second quarter, prediction markets generated more revenue than crypto trading fees for the company.
With equities, crypto, and prediction markets all drawing high transaction volumes at once, Robinhood is no longer dependent on any single business line to keep growing.
Source: The Motley Fool
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