Robinhood's Crypto Revenue Expected to Drop 26% in Q1 2025

JPMorgan Chase has forecasted a decline in Robinhood's cryptocurrency business revenue for the first quarter of 2025, following a record high at the end of 2024. This projection is based on the natural fluctuations of the cryptocurrency market, which often experiences periods of high volatility followed by stabilization or decline. The record high revenue at the end of 2024 was likely driven by increased trading activity and market enthusiasm, but as the market cools down, revenue is expected to normalize, leading to a decline in the first quarter of 2025.

According to the analyst's forecast, Robinhood's cryptocurrency trading revenue surged by 700% in the last quarter of the previous year, driving a significant increase in overall trading revenue. However, due to the late-quarter stock and bond sell-off and the cryptocurrency market pullback in the first quarter, the quarterly cryptocurrency trading volume is expected to drop from $71 billion in the fourth quarter to $52 billion. The Assets Under Custody (AUC) are expected to decline by 5% to $183.3 billion quarter-over-quarter, but still show a 41% year-over-year growth.

Despite the retail buying frenzy stimulated by the U.S. tariff policy in early April, analysts believe it will be challenging to reverse the first-quarter downturn. Weak demand for margin and derivative trading could further drag down performance. JPMorgan maintains a "Neutral" rating with a target price cut of $1 to $44, implying about a 10% downside from the current $49 share price.

JPMorgan Chase's analysis suggests that while the decline in revenue is expected, it does not necessarily indicate a long-term downturn for Robinhood's cryptocurrency business. The company has been actively expanding its services and improving its platform, which could help mitigate the impact of short-term market fluctuations. Additionally, the overall trend in the cryptocurrency market remains positive, with increasing institutional interest and regulatory clarity.

The decline in revenue is also a reflection of the broader market conditions, which have seen a shift in investor sentiment and trading behavior. As the market matures, it is expected that the volatility will decrease, leading to more stable revenue streams for companies like Robinhood. However, this also means that companies will need to adapt their strategies to maintain growth in a more competitive and regulated environment.

In conclusion, JPMorgan Chase's projection of a decline in Robinhood's cryptocurrency business revenue for the first quarter of 2025 is based on a thorough analysis of market conditions and historical trends. While the decline is expected, it is not seen as a cause for concern, as the company continues to innovate and adapt to the changing landscape of the cryptocurrency market. Robinhood is set to release its first-quarter earnings report after the market close on May 1, which will provide further insights into the company's performance and future outlook.