Robinhood's Crypto Revenue Expected to Drop 25% in Q1 2025

Robinhood, the online trading platform, is expected to see a decline in its crypto revenue for the first quarter of this year, following a record-breaking performance in the last quarter of 2024. According to JPMorgan analyst Kenneth Worthington, the digital asset volumes are forecasted to drop, which could impact Robinhood's overall transaction-based revenue.

The fourth quarter of 2024 saw a remarkable 700% surge in cryptocurrency trading revenue for Robinhood, contributing significantly to its overall transaction-based revenue. However, Worthington anticipates that this momentum may not continue into the first quarter of this year. He attributes this expected slowdown to a decline in both equity and crypto markets, particularly in the latter half of the quarter.

Worthington estimates that Robinhood users traded approximately $52 billion in crypto during the first quarter, a decrease from the $71 billion traded in the fourth quarter of 2024. This drop is attributed to a "risk-off" environment that has erased much of the market’s gains since the start of the year. Additionally, Robinhood’s assets under custody (AUC) are expected to fall by 5% from the prior quarter to $183.3 billion, although this figure is still up 41% year-over-year.

Despite strong retail buying in early April following tariff-related news from Washington, Worthington suggests that this activity may not be sufficient to lift the first quarter results. He also warns that softer demand for margin and derivatives trading, a trend also observed at competitor Interactive Brokers, could negatively impact Robinhood’s overall performance.

Worthington has maintained a neutral rating on the stock and has trimmed his price target by $1 to $44, indicating about 10% downside from the current price just below $49. Robinhood is set to report its first quarter results after the U.S. market close on Wednesday.