Shares of Robinhood (HOOD) fell 7% on Thursday after the trading platform reported earnings and revenue that beat forecasts and announced that its chief financial officer would leave the company in the first quarter of next year.
Shares fell as much as 8% in early trading as Wall Street analysts flagged higher-than-expected operating expenses and cryptocurrency revenue, while strong, fell short of expectations.
In the third quarter, Robinhood reported earnings per share of $0.61, higher than the $0.53 expected by Wall Street, according to Bloomberg data. Total net revenue was $1.27 billion, up 100% year-over-year and ahead of forecasts of $1.2 billion.
An increase in transaction-based revenue was driven by cryptocurrency revenue, which rose more than 300% to $268 million, although it fell short of the expected $287.2 million. Share income increased 132%.
“Our team’s relentless product velocity drove record trading results in the third quarter and we’re not slowing down: Prediction markets are growing rapidly, Robinhood Banking is starting to roll out, and Robinhood Ventures is arriving,” Robinhood CEO Vlad Tenev said in Wednesday’s earnings release.
In addition to its third-quarter results, the company said its chief financial officer, Jason Warnick, will retire next year and leave his position in the first quarter. Expert Shiv Verma will take over as CFO after Warnick steps aside.
Shares of the Menlo Park, California-based company have risen nearly 40% since joining the S&P 500 in September and are up 280% so far this year as the company has become the top performer in the S&P 500 (^GSPC) this year.
The stock rally has been fueled by new product launches this year, ranging from tokenized stocks in Europe to prediction markets and crypto betting, as Robinhood aims to increase participation in customer wallets.
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“I see a lot of companies copying from Robinhood,” Paul Brody, EY’s global blockchain leader, told Yahoo Finance on Wednesday, “offering these additional services, integrating them into a very nice user experience, and delivering them to their end customers.”
Wall Street points to the explosive growth of the platform’s prediction markets launched last year. The service allows traders to bet on the outcome of important events, ranging from football matches to Nvidia’s (NVDA) earnings results, the length of the government shutdown, and bitcoin’s year-end price target.
“The prediction markets are really on fire,” Robinhood CEO Vlad Tenev said during the earnings call on Wednesday.
