Digital currency trading is nearly doubled, and Robinhood's performance exceeds expectations

Source: Wall Street News

Boosted by the crypto trading boom, "U.S. meme stock brokerage" Robinhood has delivered a quarterly earnings report that exceeded market expectations.

According to the company's statement released on Wednesday, its total net revenue in the second quarter increased 45% year-on-year to $989 million, higher than analysts' average expectation of $921.5 million.

Among them, digital currency trading revenue became the biggest highlight, surging 98% year-on-year to $160 million, nearly doubling, and only slightly lower than analysts' expectation of $162.1 million. This performance ended the previous record of five consecutive quarters of triple-digit growth.

The company's net profit performance was also impressive, exceeding expectations and doubling to $386 million, or 42 cents per share.

Boosted by the results, Robinhood's stock price rose 3.34% in after-hours trading at one point, but now it has turned down 0.7% in after-hours trading. Its cumulative gain this year has reached 185%.

Company executives expressed optimism about the prospects. Chief Financial Officer Jason Warnick said in a statement, "July has started well for the third quarter, with customers' net deposits accelerating to about $6 billion, and all types of trading activities remaining strong."

Tokenized stock business attracts regulatory attention

Robinhood's pace of innovation in the cryptocurrency field is accelerating.

In June this year, the company began offering "tokenized" stocks to 150,000 customers in 30 European countries. CEO Vlad Tenev called the move "the biggest innovation in our industry in the past decade" in a statement.

However, this business has also quickly attracted the scrutiny of European regulators.

As previously written in Wall Street News articles, Robinhood's tokenized stock trading business allows European retail investors to buy tokens linked to the equity of unlisted companies such as OpenAI and SpaceX. But this move has not only been strongly opposed and warned by OpenAI, but also attracted the attention of European regulatory authorities. The Central Bank of Lithuania has launched an investigation into Robinhood's stock token products.

Adhering to the cooperation model with banks

Amid the trend of fintech companies applying for bank licenses, Robinhood has chosen a different path. Tenev said on Wednesday's analyst call that he prefers to cooperate with banks rather than become a bank directly.

"The disadvantages of obtaining a bank license outweigh the advantages," Tenev said. He revealed that Robinhood is cooperating with fintech-friendly bank Coastal Community Bank to launch bank-like products.

This strategic choice reflects the company's consideration of seeking a balance between rapid expansion and compliance risks.

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