Robinhood Reaches for More Wallet Share With New Products

Robinhood Markets has made its name as a place for younger investors to day trade meme stocks, crypto and options on their phones.

And on Wednesday’s (Oct. 30) third quarter 2024 earnings call, the retail trading platform’s executives emphasized to investors that their main aim is now to increase wallet share of existing investors while attracting a broader group to its platform.

Per its materials, the company’s assets under custody increased 76% year over year (YoY) to $152.2 billion, driven by continued net deposits and higher equity and cryptocurrency valuations. Robinhood’s average revenue per user also increased by 31% YoY, to $105.

Net deposits for the most recent quarter were north of $4 billion. Robinhood’s funded customers increased by 1 million YoY to 24.3 million, while investment accounts increased by 1.5 million YoY to 25.1 million.

“I’m really proud of our Q3 results and how smoothly our product engine is humming,” said Vlad Tenev, CEO and co-founder of Robinhood. “In the past month, we introduced Robinhood Legend, our new desktop offering, and announced index options, futures, and a realized profit and loss tool are coming soon. And just this week, we launched our Presidential Election Market. We have a ton of momentum, and we’re just getting started.”

Still, Robinhood turned in a relatively soft quarter and missed Wall Street expectations, sending its own stock down double digits in extended hours.

Read more: Robinhood Purchases Pluto to Provide AI-Powered Investment Advice

Expanding Products, Reaching Investors

October also marked the debut of Robinhood Legend, a desktop trading platform designed for active traders and built with a sleek interface and advanced tools tailored to its evolving customer base. The firm also plans to launch futures and index options by year-end, with contract fees aimed at undercutting competitors.

Robinhood’s ambitions are not just about new products — they reflect a broader strategy to capture a greater share of each investor’s trading activity and bring on a more diverse set of users.

After all, the retail trading app reportedly has around 10% of the U.S. adult market but less than 0.3% of the $65 trillion worth of retail assets in the U.S. That suggests that it either has mostly small investors, serious investors’ fun money, or both, trading on the platform — with valuable retirement and other responsible investment funds held and managed elsewhere.

As investing competes with sports gambling for attention among younger, risk-seeking users, Robinhood’s challenge lies in solidifying its appeal through compelling features and lower-cost offerings, while at the same time convincing risk-averse investors to rely on its platform for their long-term goals.

To that end, in July, Robinhood acquired Pluto, an artificial intelligence-powered investment research firm, adding machine learning expertise to its platform. Pluto’s algorithms help deliver personalized investment strategies, a value-add for users looking to simplify their trading decisions, and an acquisition that aligns with Robinhood’s strategy of giving users more reasons to stay as it seeks to bolster user engagement and loyalty.

Read more: Robinhood Introduces Lower Margin Rates, Targets More Advanced Investors

For the most recent quarter, Robinhood’s total net revenues increased 36% YoY to $637 million.

“Q3 was another strong quarter, as we drove 36% year-over-year revenue growth, and dropped most of that to the bottom line,” said Jason Warnick, CFO of Robinhood. “We entered 2024 with the goal of delivering another year of profitable growth, so we’re excited to have already broken prior full-year records for both revenue and EPS.”

The platform’s results around options contracts traded increased 47% YoY to 443.4 million, while crypto notional trading volumes increased 112% YoY to $14.4 billion, and overall Robinhood’s monthly active users increased 7% YoY to 11 million.

In an era where trading apps vie for attention alongside sports betting platforms, Robinhood’s shift toward a more mature financial product suite could help differentiate it from rivals. The question is whether these moves will be enough to sustain its appeal to both new and existing investors as it pushes for a larger slice of the expanding retail investing market.