Robinhood CEO eyes billion-dollar revenue as crypto volumes surge

abdelaziz Fathi

Robinhood has observed a 75% MoM rise in cryptocurrency trading volumes in November, marking a reversal from its previous trend. According to an SEC filing on December 4, this boost contrasts with flat trading volumes in equity and options contracts during the same period.

The surge in crypto trading on Robinhood aligns with the overall rally in the cryptocurrency market last month, which saw Bitcoin climbing about 8%. The recent crypto market rally, which has led to a 40% surge in total market capitalization to $1.6 trillion over the past two months, may signal a more profitable fourth quarter for Robinhood.

Meanwhile, the no-fee app has been expanding its offerings and exploring new markets. The company plans to launch in the UK in early 2024, marking its third attempt to enter the UK market, with features like the ability to trade 6,000 US stocks and 24-hour trading on weekdays. It also introduced 24-hour trading on select stocks and ETFs in the US earlier this year.

Looking ahead, Robinhood plans to introduce futures trading and a credit card offering in 2024, subject to regulatory approval. The company’s acquisition of credit card startup X1 for $95 million in June was said to diversify its product offerings beyond traditional trading services.

Interestingly, Robinhood has increased the interest rate on uninvested cash balances for its best customers to 5% APY. This competitive rate, available to Gold customers with a $5 per month subscription fee, comes amid rising U.S. Treasury yields. With the new rate, users can generate returns by simply parking their money in savings accounts within the app-based brokerage firm.

For non-Gold customers, the interest rate on cash balances remains at 1.5% APY. These rates are applicable to customers participating in Robinhood’s brokerage cash sweep feature, which automatically moves uninvested funds into a separate deposit account. This feature leverages a network of six banks, providing FDIC coverage of $1.5 million per customer, surpassing the standard limit per bank of $250,000. Robinhood has also indicated plans to raise this coverage limit to $2 million on June 1.

Despite these expansion plans, Robinhood’s third-quarter earnings report painted a mixed picture. Net revenue was reported at $467 million, falling below the expected $478.9 million but still showing a 29% increase from the same quarter the previous year.

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