Key Points
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Robinhood Chain generated $26 million in revenue in its first quarter on mainnet, after launching on July 1.
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Event-contract revenue at Robinhood hit $173 million in the third quarter, up more than sixfold year over year.
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The majority of Wall Street analysts rate the stock a buy or a strong buy.
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Robinhood Markets (NASDAQ: HOOD) just gave investors two big reasons to pay attention to its crypto business as its third-quarter earnings, reported Oct. 27, highlighted some interesting developments beyond traditional crypto trading. In fact, two numbers hint at where the company, and the broader crypto market, could be headed next.
One of those numbers comes from Robinhood Chain.
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The $26 million figure that could change how investors see Robinhood
Robinhood’s latest earnings report raised concerns among crypto bulls. Crypto revenue fell sharply from a year earlier as trading activity cooled. But looking only at the headline misses what may be the more important development.
The standout number was $26 million. That was the amount of crypto revenue generated by Robinhood Chain in its first quarter on mainnet, after launching on July 1. Robinhood Chain also processed more than $80 billion in decentralized exchange volume and generated more than $50 million in fees during the quarter.
That said, traditional crypto trading revenue is highly cyclical. When prices rise and retail interest returns, trading activity can surge, but when markets cool, revenue can drop just as quickly.
Robinhood’s own third-quarter results showed volatility, with crypto transaction revenue falling 55% year over year to $120 million. Excluding Chain’s $26 million, that figure was $94 million, down 6% from the prior quarter.
But Robinhood Chain suggests that the company is trying to move beyond simply benefiting when customers buy and sell crypto. Instead, it’s building infrastructure around the broader crypto ecosystem, potentially allowing investors more ways to participate in tokenized assets and decentralized trading.
That broader push beyond traditional crypto trading becomes even more interesting when you look at Robinhood’s other major growth driver.
Prediction markets are becoming a powerful growth engine
The second number that really stood out was $173 million in event-contract revenue. That business grew more than sixfold year over year during the third quarter, making prediction markets one of Robinhood’s fastest-growing businesses. In fact, the company generated more event-contract revenue than it did from equity trading during the quarter.
Prediction markets fit naturally with the company’s main customer base.
Robinhood has built its business around making financial markets more accessible and engaging for retail traders, and event contracts extend that idea into sports, politics, and other real-world events. Its growth has been hard to ignore, and it explains why Robinhood’s transaction-based revenue still rose 19% year over year even as crypto revenue fell sharply.
Event contracts show that the company can develop entirely new revenue streams without relying solely on stock or crypto markets. That diversification matters because it reduces Robinhood’s dependence on any single market trend.
It’s a meaningful development for Robinhood’s broader investment case, but the company still faces real risk.
Crypto remains volatile and cyclical, as evidenced by the third-quarter decline in crypto revenue. Prediction markets also face significant uncertainty regarding regulation and competition, while higher operating expenses could continue to pressure profitability.
Still, 26 of the 32 Wall Street analysts covering the stock rate it a buy or strong buy, with an average target price of around $131.
Even so, at a forward price-to-earnings (P/E) ratio of about 28, Robinhood isn’t exactly cheap. The key question is whether newer businesses like Robinhood Chain and prediction markets can keep delivering enough growth to justify that premium.
What these two numbers say about Robinhood’s future
Overall, Robinhood’s latest earnings showed that the future of its crypto business may be about more than just getting people to trade Bitcoin. Robinhood Chain’s $26 million debut underscores the potential of owning the infrastructure that powers the crypto ecosystem. Meanwhile, prediction markets show how the company is finding new ways to allow users to trade on real-world events.
While these two businesses are still in their early stages, the two standout numbers from Robinhood’s latest earnings offer a glimpse into where its next phase of growth could come from.
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Rick Orford has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Robinhood Markets. The Motley Fool has a disclosure policy.
