Morgan Stanley to offer Crypto Trading

Key Takeaways

• Robinhood Markets shares fell Thursday following a report that Morgan Stanley is planning to add cryptocurrency trading to its E*Trade platform.
• The online trading platform has also revealed that the full-year costs will be higher than originally expected due to costs associated with the acquisition of TradePMR.
• The news offset better-than-anticipated profit and sales in the first quarter.

Shares of Robinhood Markets (HOOD) declined Thursday following a report that Morgan Stanley (MS) is planning to add cryptocurrency trading to its E*Trade platform. If big banks decide to enter the crypto trading market, Robinhood may face increased competition.

Robinhood warned that the costs of its recent acquisition would be higher than originally thought, and also cautioned about any potential impact from a Federal Reserve interest rate cut.

The company expects adjusted operating expenses for the full year and share-based compensation to be between $2.085 billion and $2.185 billion. This is a significant increase from its previous estimate of $2.0 to $2.1 billion. It explained this was because of anticipated expenses related to its acquisition, which closed in first quarter, of the custodial-and-management platform TradePMR.

CFO Jason Warnick noted that during Robinhood’s earnings conference call, if the Fed cut borrowing costs by 25 basis point, “the impact on a standalone basis would be about $50 million” as a headwind to net interest income.

Robinhood Q1 Results Top Estimates

The company’s first quarter results were better than expected. Robinhood reported earnings (EPS) per share of $0.37, on revenue up 50% year-overyear to $927million. Visible Alpha surveyed analysts who expected $0.32 per share and $915 million respectively.

Despite today's 1.2% decline, Robinhood Markets shares are up about 30% year-to-date.