Robinhood Q3 revenue doubles: prediction market becomes a new growth engine, why did the stock price fall instead of rise?

Author: Nancy, PANews

As October comes to a close, listed companies are gradually revealing their third-quarter results. The American online brokerage firm Robinhood delivered a financial report that exceeded expectations, with both revenue and profit reaching new records. Its diversified strategy is beginning to show results, and it is accelerating its transformation into a financial technology company. However, despite the impressive performance, Robinhood's stock price fell against the trend after the earnings report was released.

Cryptocurrency trading is the core source of growth, predicting trading to become a new growth engine.

In the third quarter of 2025, Robinhood delivered an impressive report card. The platform's total revenue reached $1.27 billion, a year-on-year increase of 100%; net profit reached $556 million, a year-on-year increase of 271%; diluted earnings per share (EPS) were $0.61, a year-on-year increase of 259%. Meanwhile, the platform added 2.5 million funded accounts this quarter, bringing the total to 26.8 million. The data shows that after years of the early benefits from commission-free trading fading, Robinhood has clearly found a new growth path, transitioning from a single trading platform to a diversified fintech group.

Despite strong performance growth, the results still fell short of market expectations, and its stock price dropped after the earnings report was released, reflecting investors' concerns about the sustainability of its future profits.

From a structural perspective, Robinhood's current income mainly comes from trading revenue (57%), net interest income (36%), and subscription-related other income (7%). Among them, cryptocurrency trading has become the core source of growth this quarter. The business revenue reached $268 million, a year-on-year increase of over 300%, accounting for more than one-third of trading revenue.

Robinhood expanded its cryptocurrency business line this year by acquiring the cryptocurrency exchange Bitstamp and partnering with the prediction market Kalshi. These two initiatives have become the main drivers for revenue breakthroughs this quarter and have been listed as one of the major business lines with an annual revenue exceeding 100 million dollars. The recovery of the cryptocurrency market has led to increased activity from retail and institutional investors, while Bitstamp's contributions to institutional and derivatives trading, along with the launch of the prediction market business, have attracted a large number of new users, boosting the growth of cryptocurrency trading revenue. However, cryptocurrency revenue still fell slightly below market expectations of 287.2 million dollars.

The addition of Bitstamp significantly boosted trading volume. Financial reports show that in October, the cryptocurrency nominal trading volume on the Robinhood platform exceeded $32 billion, with Bitstamp contributing $18 billion (mainly from institutional trading). Going forward, Bitstamp will also become the main business platform for Robinhood's push into tokenized stock services. However, while Bitstamp's institutional trading has driven a surge in transaction volume, the relatively low fee rates mean that the actual revenue contribution is limited, raising market concerns about revenue growth.

At the same time, the prediction market business is also experiencing rapid growth. In the third quarter, Robinhood's prediction contract trading volume doubled compared to the previous quarter to 2.3 billion contracts (each contract valued at 1 dollar), becoming the third most active trading category after stocks and options. In October, the trading volume reached as high as 2.5 billion dollars, with an expected profit of approximately 25 million dollars for the platform that month.

In addition to cryptocurrency and prediction markets, Robinhood's stock trading revenue grew by 132%, and options trading revenue grew by 50%. However, these trading businesses are generally considered to be highly cyclical. Rothschild & Co Redburn analyst Charles Bendit gave Robinhood a “sell” rating, believing that the company has performed excellently in product execution, but that the current performance may reflect a cyclical peak, while the market valuation implies unverified long-term stability.

Becoming this year's dark horse in the S&P 500, is preparing for banking and investment operations.

In 2025, Robinhood became one of the best-performing stocks in the S&P 500 Index, with a cumulative stock price increase of over 222% throughout the year, far surpassing the Nasdaq 100 Index. The strong stock price is not only a recognition of the market for Robinhood's growth story but also reflects its fundamentals continuing to outperform expectations.

Since the stock buyback program was launched in 2024, Robinhood has repurchased approximately $810 million worth of shares. Meanwhile, Robinhood CEO Vlad Tenev's long-term incentive plan (if the stock price reaches $101.5 per share in 2025, the two founders of Robinhood will each receive 13.8 million shares) has been fully realized in the third quarter, and his annual cash compensation is currently only $40,000.

Robinhood's strong financial performance has also provided ample cash flow support for business diversification. According to the financial report, as of the end of the third quarter, Robinhood held $4.3 billion in cash and cash equivalents, with shareholder equity of approximately $8.57 billion. It is expected that the adjusted operating expenses for the entire year of 2025 will be around $2.28 billion, slightly higher than previously anticipated, mainly due to increased employee bonuses resulting from better-than-expected performance and continued investment in new businesses and technology platforms. Although operating expenses grew by 31% year-on-year in Q3, revenue doubled, and profit margins continued to improve.

Robinhood is also optimistic about its future financial performance, noting that the start of the fourth quarter has been very strong. In October, the monthly trading volumes for stocks, options, prediction markets, and futures on the platform all reached historic highs, and the margin balance also hit a new record. Currently, Robinhood has 11 business lines with annualized revenues of $100 million or more, and it plans to launch more asset classes in the future.

“In terms of product vision, we plan to make Robinhood a household financial center.” Vlad Tenev revealed during the earnings call that due to systematic adjustments in organization, culture, and technology over the past few years, the company's product execution and iteration speed have significantly improved, establishing the core goal of “rapidly delivering products,” and the platform is currently vigorously promoting multiple business lines.

For example, in terms of forecasting business, Robinhood's prediction market section has entered a rapid expansion phase, with over 1,000 contracts now available, covering fields such as sports, finance, entertainment, culture, and technology. The company is communicating with overseas regulatory agencies, including the UK's Financial Conduct Authority (FCA), to explore the feasibility of launching offshore prediction markets outside the United States.

In banking, Robinhood Banking is being rolled out in phases, aiming to become the preferred platform for users' salary deposits by offering a diverse range of financial products and services.

In terms of investment business, the company is preparing Robinhood Ventures and has submitted documents to the U.S. SEC, focusing on investing in innovative projects to introduce new growth engines for the platform.

In addition, in terms of tokenized stocks, Robinhood has launched related services in over 30 countries and expanded to over 400 products. Next, it plans to implement related trading on the Bitstamp platform and incorporate into the DeFi ecosystem.

Apart from the US market, Robinhood is planning international expansion, aiming for over 50% of revenue to come from markets and institutional clients outside the US within the next decade, in order to change the current structure where retail business accounts for too high a proportion. However, it prefers to achieve expansion through organic growth, while not ruling out the possibility of mergers and acquisitions. Currently, internationalization is still in its early stages.