Robinhood Markets’ third-quarter earnings miss and a 55% annual decline in crypto revenue did not prompt Bernstein or StoneX to cut their ratings or price targets, as both firms focused on the brokerage’s expansion into prediction markets, derivatives and blockchain-based financial services.
Bernstein kept its outperform rating and $160 price target on Robinhood, while StoneX maintained a buy rating with a $170 target. The assessments came after Robinhood reported $1.42 billion in quarterly revenue and $120 million in crypto revenue, down from the same quarter a year earlier.
Robinhood shares fell 10% in after-hours trading following the results. The sell-off reflected the headline earnings miss, though analysts argued that reported profit was affected by an unrealized investment loss rather than a deterioration in the company’s operating business.
JMP Securities analyst Devin Palmer said an unrealized loss in Robinhood Ventures Fund I reduced earnings per share by $0.07. After excluding that loss and other specified items, Palmer calculated adjusted earnings per share at $0.60 above Wall Street consensus expectations.
The reaction leaves Robinhood facing a familiar market test: its stock has been rewarded for broadening beyond commission-free equities trading, but quarterly results now show how quickly reported earnings can be affected by investment marks and a cooling period for cryptocurrency trading.
Crypto trading revenue declines as product mix changes
Crypto revenue was one of the clearest weak points in the report. Robinhood generated $120 million from crypto during the quarter, a 55% drop from a year earlier. The figure includes revenue from the company’s growing crypto business rather than only spot token trading, making the underlying mix increasingly relevant to analysts assessing the segment.
Bernstein analysts Gautam Chhugani and colleagues said Robinhood’s crypto operations are shifting from a retail trading model toward infrastructure-style products. Their view rests partly on the contribution from Robinhood Chain, the company’s blockchain network, and from stablecoin-related services such as Robinhood Earn.
Robinhood Chain produced $26 million in net revenue during its first quarter on mainnet, according to Bernstein. That early contribution is small relative to Robinhood’s overall quarterly revenue, but it gives the company a potential new source of blockchain-related fees that is less directly tied to retail enthusiasm for volatile tokens.
Excluding Robinhood Chain, Bernstein estimated crypto revenue declined 6% from the second quarter to $94 million. The firm said the fall did not primarily reflect weaker economics from standard crypto trading. Instead, the average revenue generated per dollar of crypto activity declined as Robinhood Earn expanded.
Robinhood Earn is a stablecoin offering that had accumulated more than $500 million in assets, according to Bernstein. The product generates less revenue than conventional token trading, reducing the average rate Robinhood earns across its crypto segment. When Bernstein excluded Earn from its calculation, revenue per dollar traded was broadly unchanged from the previous quarter.
That distinction gives a more nuanced reading of the crypto decline. A lower revenue figure can signal weaker activity, but it can also result from customers placing more funds in lower-fee products. For Robinhood, the latter would shift revenue away from high-turnover trading toward balances and payment-oriented services.
Prediction markets emerge as a larger revenue line
Prediction markets were a stronger area in the third quarter. Bernstein said the business generated $173 million in quarterly revenue, placing it above the reported crypto revenue figure for the period.
The firm also pointed to a changing contract mix. Non-sports contracts accounted for about 30% of prediction-market activity, roughly double their previous share. Crypto, commodities and financial contracts led that expansion, reducing the unit’s reliance on sports-related events.
Prediction markets allow users to trade contracts linked to the outcome of future events, such as economic data releases, political contests or asset-price movements. Their growth has given Robinhood another transaction-based product that can attract customers during periods when stock and crypto trading volumes are subdued.
The model also carries a different set of risks than a conventional brokerage product. Regulatory treatment of event contracts remains unsettled in several jurisdictions, particularly for contracts tied to politics and sports. Robinhood’s ability to preserve growth in the category will depend on whether the available contract range can remain broad enough to sustain customer interest.
Bernstein expects prediction markets, perpetual futures and Robinhood Chain to account for roughly 25% of Robinhood’s revenue by 2028. Perpetual futures are derivatives contracts without an expiry date and are widely used in crypto markets, though they can expose traders to leverage-related losses.
Analysts focus on revenue diversification
The unchanged price targets indicate that Bernstein and StoneX are placing greater weight on Robinhood’s longer-term revenue mix than on one quarter’s crypto decline. The company is building businesses that could draw fees from trading, event contracts, derivatives activity, stablecoin balances and blockchain infrastructure.
That expansion may also make Robinhood’s results harder to evaluate through a single headline metric. Crypto trading revenue remains a useful gauge of retail risk appetite, but it no longer captures the entire direction of the company’s digital-asset strategy. A stablecoin balance product, an on-chain network and a perpetual futures platform can each produce revenue differently and carry different margins.
The third-quarter report therefore showed a split picture. Robinhood’s reported earnings and year-over-year crypto revenue disappointed the market, triggering an immediate share-price decline. Yet analysts who remain positive on the stock see evidence that newer business lines are beginning to contribute meaningful revenue, with prediction markets already producing a larger quarterly figure than crypto.
Whether that view holds will depend on execution. Robinhood will need to show that revenue from Robinhood Chain, stablecoin products and prediction markets can grow without simply replacing higher-margin crypto trading fees.
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