Robinhood sinks after Q1 results trail estimates
Outside of event contracts, revenues were weak across the board.
Robinhood Markets is down double digits on Wednesday morning after reporting disappointing Q1 results after the close on Tuesday, as nothing said during the postmarket conference call gave traders enough reason to change their minds.
For the period ended March 31, the brokerage reported:
Net revenue of $1.07 billion (estimate: $1.14 billion)
Earnings per share of $0.38 (estimate: $0.42).
(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)
To dig into the details, there is not one subset of sales that exceeded estimates outside of the “other” category, which is driven by event contracts. Here’s a breakdown of transaction-based sales:
Options: $260 million (estimate: $282.8 million).
Other: $147 million (estimate: $135.7 million).
Crypto: $134 million (estimate: $147.6 million).
Equities: $82 million (estimate: $83.8 million).
The crossover of “other” (which is primarily fueled by event contracts) and crypto might be more of a passing of the guard than a one-off. CEO Vlad Tenev said crypto volumes are looking like “more of the same” in early Q2, while April prediction markets volumes are shaping up to “probably be our second-best month ever.”
“The key debate from here is whether accelerating product velocity and improving traction in banking/card/retirement can offset more uneven near-term trading and net new assets trends,” wrote Morgan Stanley analyst Michael Cyprys. “April volume commentary was constructive, but take-rate dynamics remain a key near-term debate after softer 1Q transaction revenues, with mix weighing on both options and crypto.”
Ahead of earnings, JPMorgan analysts led by Kenneth Worthington cut estimates on the brokerage after a discussion with management, in particular lowering their net interest revenue projection for Q1. That figure of $359 million also missed the $390.2 million projection.
The brokerage had a rough Q1, with shares sinking nearly 40% as a host of speculative trades (including crypto) performed poorly. The stock has had a very tight correlation with BlackRock’s iShares Bitcoin Trust throughout 2026, even stronger than its correlation with the SPDR S&P 500 ETF.
However, the stock has recovered strongly along with the broader market in Q2, buoyed by catalysts including the approval of the removal of the day trading limit for small investors and winning a role to serve as the brokerage and initial trustee of investment accounts for children established by the 2025 tax law (dubbed “Trump accounts”).
Tenev discussed both these topics during the conference call.
Day trading limits for small investors were “vestigial and kind of outdated,” he said, and “we felt like this disproportionately affected us. So excited to see it go.”
The CEO called Trump accounts “an opportunity to be in front of this next generation of customers and an opportunity to show that we can be a reliable partner to the US government as they’re pursuing initiatives.” He added that the company is focused on making “the best product that the government has ever been associated with.”
CFO Shiv Verma said that Robinhood’s work for Trump accounts is contracted on a cost-plus basis with a small margin.
