Robinhood's Stocks Affected by CFO's Departure

Robinhood (HOOD) shares fell on Thursday following the company's better-than-expected earnings and revenue report. After the company's Chief Financial Officer (CFO) Jason Warnick announced he will be stepping down in the first quarter of next year, the shares dropped by up to 8% in early trading.

In the third quarter, Robinhood reported earnings per share of $0.61, exceeding the $0.53 estimate from Wall Street. Total net revenue was recorded at $1.27 billion, representing a 100% increase year-over-year. The expectations were at $1.2 billion.

The increase in transaction-based revenues was supported by crypto revenues that grew by more than 300%, with this revenue reaching $268 million, though it fell short of the analysts' expected $287.2 million target. Stock trading revenue increased by 132%.

Robinhood CEO Vlad Tenev stated in the report, "The relentless product velocity of our teams has produced record business results in the third quarter, and we won’t be slowing down. Predictive Markets are growing rapidly, Robinhood Banking is being rolled out gradually, and Robinhood Ventures is coming,"

The company announced alongside its third-quarter results that Jason Warnick would retire next year and step down in the first quarter. Shiv Verma, an insider, will be appointed as CFO after Warnick departs.

The shares of the California-based company in Menlo Park have risen by 40% since joining the S&P 500 in September and have increased by 280% year-to-date, making it the best-performing stock in the S&P 500 in 2023.

This rise in shares is supported by the launch of new products, from tokenized stocks to predictive markets and crypto staking. Robinhood aims to increase its customer wallet share.

Paul Brody, global blockchain leader at EY, said, "I see many companies copying Robinhood. They are providing these additional services, beautifully integrating them into a user experience, and reaching the end users."

Wall Street analysts are noting the explosive growth of the predictive markets launched by the platform last year. This service allows investors to predict the outcomes of major events. Vlad Tenev remarked, "Predictive markets are really on fire; it’s hard to believe we launched this service a year ago. Each quarter, we doubled up to 2.3 billion contracts in the third quarter."

Tenev noted that October alone was larger than the total for the third quarter for predictive markets. Wall Street analysts commented that HOOD predictive markets represent a significant business potential that has not yet been reflected in current forecasts.