Mixed feelings! Robinhood (HOOD.US) achieves record high total revenue in Q4 but is dragged down by cryptocurrency business. Predicting that the emerging market will support growth hopes.

Online retail coupon broker Robinhood Markets Inc. (HOOD.US) announced its fourth quarter earnings report after the US stock market closed on Tuesday. Despite achieving record overall revenue, the company's quarterly performance fell below Wall Street expectations due to a significant decline in cryptocurrency trading revenue, causing a significant drop in stock price in after-hours trading. However, the company's emerging prediction market business has shown remarkable growth potential, becoming a bright spot in the gloomy earnings report. Core Performance: Cryptocurrency Business Impacts Overall Performance The financial report shows that the California-based company generated revenue of $1.28 billion in the three months ending on December 31, setting a new record high, but still lower than the analyst's consensus of $1.34 billion. Net profit plummeted by 34% to $605 million, or $0.66 per share, slightly higher than Wall Street's expected $0.63 per share. During a period of stock market selling triggered by concerns about an AI bubble and political turmoil at GEO Group Inc., retail investors continued to enter the market to support the US stock market. This drove Robinhood's trading-related revenue to grow by 15% to $776 million this quarter, with stock revenue growing by 54% as the main driver and options revenue increasing by 41%. However, not all asset categories were able to benefit from the continued volatility. Cryptocurrency trading revenue for the quarter was $221 million, a 38% year-on-year decrease, lower than the analyst's expected $248 million. Since the sharp drop in Bitcoin in October last year, the cryptocurrency market has remained depressed for several months - at that time, Bitcoin nearly halved from its peak on October 6, with a large number of leveraged positions being liquidated. Deutsche Bank Aktiengesellschaft analysts pointed out in their report that the US spot Bitcoin ETF saw outflows of approximately $7 billion and $2 billion in November and December last year, respectively. In an interview, the new Chief Financial Officer Shiv Verma discussed the company's cryptocurrency trading pricing structure: "We use a lower-tier fee structure for high-frequency traders." "Active traders are still trading at high frequencies," Verma added, "but these clients qualify for the lowest fees. As a result, our actual commission rate is slightly lower than market expectations." Following the release of the financial report, Robinhood fell by over 7% after hours. The company's stock price has fallen by 24% cumulative since the beginning of the year. Business Highlight: Prediction Market Surges Amid challenges in traditional trading businesses, Robinhood's prediction market business has become the biggest growth surprise in the financial report. This business allows users to bet on the outcomes of various events such as sports. Robinhood announced on Tuesday that over 12 billion event contracts were traded on its platform last year. CEO Vlad Tenev said during the analyst conference call that this is the fastest growing business in the company's history. "We are at the beginning of a supercycle in the prediction market," he said. To strengthen its dominance in this field, Robinhood announced this quarter a partnership with Susquehanna International Group to acquire a majority stake in the derivatives exchange LedgerX. At the time of the announcement, the popularity of the prediction market was soaring, and the US Commodity Futures Trading Commission announced plans to set new regulations for this multi-billion-dollar industry. Tenev added that Robinhood plans to expand to "multiple new markets" later this year.