Robinhood's fourth-quarter profit fell 34%, the cryptocurrency downturn dragged down revenue, and fell more than 6% after the market | Financial report news

# Bao Yilong

Robinhood’s Q4 net income fell 34% to $605 million, with total revenue of $1.28 billion missing Wall Street estimates. Crypto trading revenue plunged 38% to $221 million, becoming the biggest drag. The company’s stock has dropped 24% this year and extended losses with a 6.6% fall in after-hours trading.

Robinhood posted a sharp drop in fourth-quarter net income. Although it slightly beat analyst expectations, the miss in total revenue raised investor concerns.

After U.S. market close on Tuesday, February 10, Robinhood reported a 34% year-on-year drop in Q4 net income to $605 million, or 66 cents per share, slightly above the average analyst estimate of 64 cents in a Bloomberg survey. However, total revenue of $1.28 billion fell short of the $1.34 billion expected by Wall Street.

Crypto trading revenue crashed 38% year-on-year to $221 million, well below the $248 million expected by analysts. Bitcoin has tumbled more than 50% since peaking on October 6 last year.

Under pressure, Robinhood’s shares have lost 24% this year, falling a further 6.6% in after-hours trading.

The earnings release comes as the U.S. brokerage sector is broadly under pressure. While retail investors remain a key pillar supporting the stock market, ongoing volatility in digital assets is testing these platforms’ ability to diversify. For Robinhood, whose stock tripled last year, whether it can sustain its growth momentum in 2026 has become a focal point for the market.

## Crypto business shrinks sharply

Weakness in digital asset trading was the biggest drag on quarterly results.

Crypto trading revenue plummeted to $221 million from $357 million a year earlier, a 38% decline. The underperformance not only missed market expectations but also reflected stress across the cryptocurrency sector.

In an interview with media, CFO Shiv Verma explained that active traders qualify for the lowest pricing tiers due to high trading volumes, resulting in lower-than-expected rebate rates for the company.

Bitcoin dropped nearly 30% from its October 6 peak during the sell-off that began in early Q4, falling a further roughly 20% after the end of the year.

Deutsche Bank analysts noted in a client report that U.S. spot Bitcoin ETFs saw roughly $2 billion in net outflows in December, following $7 billion in outflows in November.

## Prediction markets emerge as growth bright spot

Despite the crypto slump, the prediction markets business delivered strong results in the fourth quarter.

After launching prediction markets in late 2024, Robinhood recorded over 12 billion event contracts traded on the platform for the full year, including a record 8.5 billion in Q4.

The emerging business provided an additional growth engine. Prediction markets allow consumers to wager on event-based outcomes across categories including sports.

However, Piper Sandler analysts estimate that sports account for 80% to 90% of volume on Robinhood’s prediction markets, meaning the end of the football season could temporarily cool the business.

During the fourth quarter, Robinhood announced a major partnership. The company will team up with Susquehanna International Group to acquire a majority stake in derivatives exchange LedgerX.

Notably, the deal was announced at a critical time — ahead of new rules planned by the U.S. Commodity Futures Trading Commission to regulate the multi-billion-dollar prediction market industry.

## Traditional trading business resilient

Core trading showed resilience in the fourth quarter.

Transaction-based revenue rose 15% to $776 million, with equity trading revenue surging 54% and options trading climbing 41%.

Net interest income increased 39% year-on-year to $411 million, supported by the interest rate environment.

Retail investors continued to be a major force supporting equities, buying aggressively during sell-offs driven by AI bubble fears and geopolitical turmoil. This provided support for Robinhood’s core brokerage business.

Robinhood Gold subscribers rose 58% year-on-year to 4.2 million. Members gain access to an AI-powered investment assistant for trading advice and order execution. The growth shows progress in the company’s push to expand into wealth management and banking services.

## Diversification strategy to tackle challenges

Facing uncertainty in 2026, CEO Vlad Tenev previously stated the company aims to build a “financial super app” that meets all customer needs on one platform.

In media interviews, Verma emphasized that the company’s business structure is resilient enough to navigate market ups and downs. He stated:

“The most important thing is to stay diversified. If you focus on the inputs, the outputs will take care of themselves.”

Still, the company faces multiple challenges. The Federal Reserve’s rate-cutting cycle could erode interest income, the timing of a crypto market recovery remains unclear, and the regulatory outlook for prediction markets is uncertain.

After tripling last year, Robinhood’s stock has fallen roughly 24% this year, as markets reassess its growth outlook.

Source: Wallstreetcn

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