HOOD Stock Drops 5% After-Hours: Robinhood’s Q3 Revenue Climbs On Prediction Markets, But Misses Wall Street Targets

• Robinhood reported adjusted earnings of $0.60 per share, surpassing the $0.56 expected by analysts.
• Premium Gold memberships expanded by 1.3 million to a record 5.18 million users, helping drive transaction-based revenue up 19%.
• Net revenue rose 12% year-over-year to $1.42 billion, missing the projected $1.44 billion. 

Robinhood Markets (HOOD) share price dropped after-hours on Tuesday after the stock broking firm missed revenue expectations even as income from trading activities hit a record.  

The brokerage firm posted adjusted earnings of $0.60 a share, comfortably beating FactSet consensus estimates of $0.56, although its third-quarter revenue of $1.42 billion stayed just below the anticipated $1.44 billion mark.

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Operating expenditures were contained at $664 million—up 8% year-over-year—which came in significantly lower than the $776 million analysts had projected. 

“We're entering Q4 with strong momentum, as October Net Deposits have already topped $13 billion month-to-date, including $6 billion from the Dell family's contribution to Trump Accounts," said Shiv Verma, Chief Financial Officer of Robinhood.

Expanding Beyond Traditional Crypto Trading

To build durable revenue streams, the platform has actively diversified away from historical reliance on crypto trading—which saw a 38% drop in transaction volume in the quarter ending September. Instead, growth has surged across alternative segments, including options and event-based prediction contracts.

Prediction markets—which allow users to wager on outcomes for sports and global events like the FIFA World Cup—have scaled rapidly. This sector operates under Rothera, a Commodity Futures Trading Commission-licensed exchange launched via a joint venture with Susquehanna International Group. 

Verma noted that Rothera has swiftly emerged as a new business pillar generating upwards of $100 million in annualized revenues.

Customer Engagement And Technological Integration

The firm's premium subscription tier, Robinhood Gold, experienced continued momentum by adding 1.3 million users during the quarter to reach a historic high of 5.18 million subscribers, representing roughly 18% of funded accounts.

Looking ahead, executive leadership expressed strong optimism for the fourth quarter. October net deposits have already crossed $13 billion, bolstered in part by a $6 billion contribution from the Dell family into Trump accounts. 

Furthermore, Robinhood is pushing deeper into automated trading through artificial intelligence. Following the introduction of custom AI agent integrations earlier this year, the firm launched "Robinhood Agents" in September, allowing users to effortlessly deploy automated trading models directly within the mobile application.

HOOD Stock: Retail View

Retail sentiment on Stocktwits was ‘bullish’ with ‘high’ message volumes. 

A user claimed the after-hours drop in share value was an overreaction and anticipated a pop in the stock. 

HOOD stock has lost about 19% year-to-date.

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