Quick Read
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HOOD sank 7% after crypto revenue cratered 55% and net interest income fell 9%, while IBKR gained 2% on the same day.
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IAI and SPY each rose roughly 0.3% while HOOD slid, confirming the selloff is company-specific rather than a sector-wide event.
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Prediction markets hit a record $173M, but Verma warned spreads are tightening early in Q4, clouding the recovery outlook.
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A quarter of records in its newest businesses isn't lifting Robinhood Markets( NASDAQ:HOOD ), because its oldest pressure points, crypto and interest income, gave way while fellow trading platforms hold steady. Robinhood stock is at $88 in morning trading, down 7%.
Interactive Brokers Group( NASDAQ:IBKR ) stock is at $83, up 2%. Webull( NASDAQ:BULL ) stock is at $5.60, up 0.2%, which suggests the pressure is specific to Robinhood.
Why Robinhood's Third Quarter Reads as Both a Beat and a Miss
Robinhood reported its Q3 2026 results on October 27. The company noted that its revenue rose 12% year over year (YoY) to $1.42 billion. That landed just under the $1.43 billion consensus compiled by Bloomberg.
Also, Robinhood said that its diluted earnings per share (EPS) under generally accepted accounting principles (GAAP) came in at $0.51. That was down from a year earlier and short of Bloomberg's $0.57 estimate. On an adjusted basis, the company revealed that it earned $0.60 per share, topping the $0.55 consensus cited by InvestorsHub. Coverage splits on "beat" versus "miss" depending on the measure, and the GAAP figure also took a mark-to-market hit on investments.
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Importantly, Robinhood revealed that its crypto trading revenue fell 55% YoY to $120 million, while crypto trading volume dropped 38%. Weakness in digital assets has weighed on Robinhood all year, and the latest quarter made it worse.
Moreover, Robinhood declared that its net interest revenue slid 9% to $415 million. CFO Shiv Verma tied part of that drop to weaker securities lending demand amid fewer initial public offerings (IPOs) and lower market volatility. The company said operating expenses rose 16% to $739 million, exceeding revenue growth. Looking at the fourth quarter, Verma told analysts, "Early indications are spreads are a little bit tighter. And we'll see how it plays out for the next two months."
Robinhood's Mix Tilts Toward Prediction Markets While Peers Hold Up
Robinhood stated that its prediction markets revenue hit a record $173 million, as customers bought and sold a record 16.4 billion event contracts. The company also pointed out that its options trading revenue rose 31%, and equities trading revenue jumped 41%, so the trading business now has growth sources beyond crypto.
In addition, Robinhood disclosed that its transaction revenue grew 19% to $867 million, a sign the mix is changing toward newer products. The company disclosed that its net deposits stayed strong but slowed down to $15.7 billion from $21.7 billion in the second quarter.
Interactive Brokers stock is up 30% year to date (YTD), a sharp contrast with the 22% YTD decline in Robinhood stock. Webull stock is down 28% YTD, while Robinhood stock has fallen 26% over the past month. A more global customer base of active traders and institutions sets Interactive Brokers apart, while Robinhood and Webull lean on retail traders, which helps explain why the selloff isn't spreading.
What Comes Next for Robinhood's Shifting Business Mix
Robinhood's next challenge is whether tighter spreads hold through the fourth quarter, since take rates on equities, options and crypto drive its transaction revenue. On the positive side, Verma said event contract volumes rose early in the quarter, and October net deposits topped $13 billion, including $6 billion from the Dell family gift to Trump Accounts.
Prediction markets growth would need to keep making up for crypto weakness for Robinhood's bull case to hold, and management said October crypto trading was holding near its third-quarter pace. Rates add another swing factor, with the Federal Reserve's policy decision scheduled for 2 p.m. ET on October 28, because rate expectations feed the company's interest income on customer cash. Verma estimated that each 25 basis point move in rates shifts revenue by 1.5%, all else being equal, so a cut could pressure that line while a hold might help it steady.
Shareholders considering Robinhood's record prediction markets results against shrinking crypto and interest revenue face a mixed setup either way. A conservative approach could make sense until the fourth-quarter spread picture resolves.
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