Here's where Robinhood's retail traders have flocked as the Iran conflict rages on

By Bill Peters

Prediction markets have been a haven for Robinhood traders seeking to ride out volatility

Robinhood said April has been the best month of the year for trading activity.

Robinhood traders flocked to an array of investment options, both traditional and nontraditional, as they sought to cope with the volatility brought upon by the Iran war.

Shiv Verma, Robinhood's chief financial officer, told MarketWatch on Tuesday that consumers remained active during the first quarter, which covered the start of the conflict.

"It's a tough macro backdrop, but they're still engaged," he said. "They're still finding ways to trade, and now they have tools to do it in many different ways that they didn't relative to a few years ago."

They gravitated toward prediction markets, a small but fast-growing business for Robinhood (HOOD) that allows users to trade on outcomes of sports and other events. There was also interest in more traditional investment options, like commodities or pre-earnings stock trades.

The popular trading app on Tuesday also said its second quarter was off to a solid start, with April on pace to be its best trading month so far this year for options and stocks. First-quarter results, however, missed Wall Street's expectations.

Shares of Robinhood fell 9.3% after hours on Tuesday. The stock had risen 66.2% on the year through Tuesday's close.

Robinhood reported first-quarter revenue of $1.07 billion, a 15% year-over year gain, but that was below FactSet forecasts for $1.14 billion. Transaction revenues rose 7%, driven by gains in prediction markets, options and stocks. Those gains were offset by a 47% drop in crypto-related revenue.

The company earned 38 cents a share during the quarter, up 3% year over year. That was a penny above last year's result, but a penny below analysts' expectations. Subscribers to Robinhood's Gold service - which gives users a wider array of investing tools, data and other services - jumped 36% to 4.3 million.

Robinhood reported the results as it tries to offer more services, like banking and credit cards, to keep investors engaged as they become more sophisticated managers of their wealth. The company recently got a win after the Securities and Exchange Commission approved plans to lift day-trading restrictions for some investors. And earlier this month, Robinhood became the brokerage partner for the investment vehicles known as Trump accounts, which include a $1,000 government contribution for U.S. children born between 2025 and 2028.

Robinhood said it expects to invest an additional $100 million to build out the interface for the Trump accounts - beyond what had previously been included in its outlook. Verma said the expenses would go toward creating a new app for the accounts and educating users on how to use them.

Robinhood is working on those accounts with BNY, which was chosen by the Treasury Department to be the financial agent for the accounts.

-Bill Peters

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04-28-26 2020ET