Robinhood Markets (NASDAQ: HOOD) saw its stock soar to its highest level in nearly two years on Wednesday. The brokerage announced its focus on expanding margins and driving ‘profitable growth’ for the year following a surprise quarterly profit announcement.
Robinhood Markets (HOOD) saw a surprising profit in the December quarter, beating analysts’ expectations. The commission-free brokerage firm revealed fourth-quarter adjusted earnings of 3 cents per share, surpassing the anticipated 1 cent loss. Increased interest income from customer loans and a revival in retail trading activity were pivotal drivers of this achievement.
The company posted revenues of $471 million for the quarter, marking a 24% year-over-year growth and beating Wall Street forecasts of $455 million. Net interest revenue witnessed a 41% increase from the previous year, driven by higher short-term borrowing rates. In addition, transaction-based revenue saw an 8% improvement at $200 million, benefiting from heightened trading activity in cryptocurrency and equity offerings.
The online broker also saw a 6% sequential increase in monthly active users, signaling a return of retail traders to the markets.
Outlook for 2024
The company didn’t issue specific top- and bottom-line guidance. However, Jason Warnick, Chief Financial Officer of Robinhood, expressed optimism for a strong 2024 based on favorable revenue and macro trends. Warnick stated,
“Looking at revenues, with the current macro backdrop, we’re finding strong growth in 2024, driven by continued 20-plus percent net deposit growth, increasing gold adoption, double-digit gains, and trading market share.”
Robinhood emphasized its commitment to expanding crypto trading offerings in Europe, citing its typically higher profitability over stock trades. The company rolled out its trading platform in the U.K. last November and aims to capitalize on the growing interest in cryptocurrency.
Robinhood gained significant attention in 2021 as the epicenter of the retail trading frenzy, with small investors leveraging the commission-free platform to inject funds into “meme stocks” during the lockdowns of the pandemic era.
Robinhood (NASDAQ: HOOD) Stock Price Action
HOOD stock jumped 13.01% to close at $13.38 on Wednesday. The traders had exchanged hands with 75,923,121 (75.92 million) shares compared to the average daily trading volume of 13.82 million.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
