Robinhood cautious on adopting corporate bitcoin treasury: 'Is it the best use of our capital?'

Robinhood Markets (ticker HOOD) reported another strong quarter of crypto trading volume, not to mention beating top and bottom-line estimates. Overall, third-quarter trading revenue jumped 129% year over year, which the company said was primarily driven by cryptocurrency revenue.

Given the rise of digital asset treasuries (DATs) among publicly traded companies this year, Robinhood executives were asked for their thoughts on adopting a corporate treasury strategy.

"We like being aligned with the community," said Shiv Verma, Robinhood's SVP of finance and strategy and incoming CFO. "Crypto is a big part of our business, and our customers are deeply engaged in it. The question we keep asking is whether it’s the right move for shareholders as well."

Verma said putting Bitcoin or other digital assets on a balance sheet has positives that show a company is aligned with the community, but that it does take up capital. She also stressed that shareholders can buy Bitcoin directly on the Robinhood platform. 

"Is it the best use of our capital?" Verma said. "There's a lot of different things you're doing, you know, from new products, for growth, investing in engineering. So we have this debate constantly. And I think the short answer is we're still thinking about it. There are pros and cons to both, and it's one that we're gonna keep actively looking at."

Robinhood’s crypto revenue rose 300% to $268 million, helping drive higher overall revenues of $1.27 billion.

Publicly traded companies hold roughly 1.05 million BTC in total, according to BitcoinTreasuries, with Strategy accounting for more than 60% of that through its 641,205-bitcoin reserve.

Later in the earnings call, the company was asked about the future of tokenized equities. The platform has expressed a tokenization push over the past several months. In October, CEO Vlad Tenev said he expects to see a framework for asset tokenization in major markets in the next five years.

"One of the things that I think is both a problem and an opportunity with traditional crypto is that crypto and the traditional financial system up until fairly recently have kind of been two separate worlds," Tenev said Wednesday. "And I think Robinhood Market has a unique position as a scaled crypto business, but also a scaled business in traditional finance to bridge the two. And actually make room for what we consider traditional assets."

Mizuho Securities analysts said Robinhood "continues to fire on all cylinders" and remains very upbeat about management's aspiration to expand globally and deeper into institutional areas. The firm raised its price target on HOOD shares from $145 to $172.

Robinhood's stock traded down nearly 10% to $129.13 at publication time, according to The Block's HOOD price data.