Robinhood beats profit estimates as post-election trading frenzy lifts volumes

By Jaiveer Shekhawat and Manya Saini

(Reuters) -Robinhood beat expectations for fourth-quarter profit on Wednesday, driven by a surge in equity, option and crypto trading on its platform following Donald Trump's return to the White House, sending its shares up more than 14% after the bell.

Robinhood's transaction-based revenue, or income generated from fees for facilitating trading in options, cryptocurrency and equities, jumped 236% in the quarter to $672 million from a year earlier.

Nearly half of those gains came from a 700% rise in revenue from crypto trading activity as bitcoin continued its rapid march towards the $100,000 mark in the quarter on hopes of favorable policies under the new Trump administration.

"It was no secret that Robinhood's Q4 earnings were going to be great, driven primarily by a huge uptick in crypto-related revenues," Ava Labs President John Wu said.

After Donald Trump's election victory, both equity and cryptocurrency markets surged as investors bet on deregulation and pro-business policies to benefit American corporates and the burgeoning digital asset industry.

The company posted an adjusted profit of 1.01 per share, compared with analysts' expectations of 44 cents, according to data compiled by LSEG.

Robinhood's assets under custody climbed 88% in the quarter to $193 billion, while quarterly net interest revenue, the bulk of which comes from margin investing, jumped 25% to $296 million.

"This was a big quarter for us, so we did over $1 billion in revenue for the first time in the history of the company, and that capped off what was a record-breaking year with over $3 billion in revenue for the whole year," Robinhood co-founder and CEO Vlad Tenev said on a post-earnings call with analysts.

(Reporting by Jaiveer Singh Shekhawat and Manya Saini in Bengaluru; Editing by Anil D'Silva)