What Happened?

Shares of financial services company Robinhood (NASDAQ:HOOD) jumped 12.1% in the afternoon session after stocks linked to the cryptocurrency sector surged after Bitcoin surpassed $80,000, reaching a new all-time high. 

The improved sentiment echoes growing optimism that the Trump administration will adopt more supportive policies toward the crypto industry. This narrative earned even more credibility after The Republicans regained control of the Senate during the 2024 elections, implying more predictable and stable policies. With supportive policies, there could be increased adoption and integration of cryptocurrencies in mainstream financial systems. 

Also, rising asset prices typically improve investor confidence, prompting traders and investors to increase their participation by placing new bets or engaging in more frequent trading. 

This heightened trading activity translates into higher transaction volumes and more revenues for trading platforms like Coinbase or Robinhood that earn fees on these trades.

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What The Market Is Telling Us

Robinhood’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Robinhood and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 8 months ago when the stock gained 13.3% on the news that the company provided its February operating data reflecting strong asset growth and higher trading volumes. Although its funded customers were only up by 130k compared to the previous month (23.6 million total), its Assets Under Custody (AUC) rose to $118.7 billion, representing a 16% month-on-month increase. This was driven by growing momentum in the public markets, which led to higher stock and cryptocurrency prices, and new inflows from existing customers into Robinhood's retirement products, which offer customers a 3% match on any contributions. 

As a result, it wasn't surprising that volumes were up across all asset classes compared to the previous month. Notably, equity trading volumes were $80.9 billion (up 36% m/m) while crypto trading volumes were $6.5 billion (up 10% m/m). Given the increased platform activities, Securities Lending Revenue also benefited and came in at $13 million, up 8%. Overall, the data showed Robinhood performed well.

Robinhood is up 173% since the beginning of the year, and at $33.75 per share, has set a new 52-week high. Investors who bought $1,000 worth of Robinhood’s shares at the IPO in July 2021 would now be looking at an investment worth $969.41.

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