Robinhood (HOOD) shares fell nearly 4% in after-hours trading on Tuesday after the trading app earned 51 cents a share in the third quarter, short of the 56 cents analysts expected. Crypto revenue beat forecasts but did not stop the slide.

The drop erased a 1.85% gain from regular trading, when the stock closed at $94.56. By 4:11 p.m. ET, shares changed hands at $90.90, a $3.66 loss per share for holders heading into Wednesday’s open.

Robinhood Stock (HOOD) Price Performance. Source: Yahoo Finance

Why Did Robinhood Miss Profit Estimates?

Revenue rose 12% from a year earlier to a record $1.42 billion, according to the company’s results, against the $1.44 billion Wall Street expected. Net income dropped 14% to $476 million.

About 7 cents of the per-share result was wiped out by a $67 million paper loss on Robinhood Ventures Fund I, a fund holding stakes in private companies that is revalued each quarter.

Operating expenses also climbed 16% to $739 million.

Is the Crypto Beat as Strong as It Looks?

Crypto revenue reached $120 million, above the roughly $114 million analysts forecast and up from $100 million in the second quarter. However, it was still 55% lower than a year earlier, as crypto trading volume on the platform fell 38% to $50 billion.

Event contracts, which let users take yes-or-no positions on outcomes such as economic data or sports results, earned more. That line brought in $173 million, over six times its year-earlier level.

Chief executive Vlad Tenev has said crypto contracts could overtake sports as the category’s biggest driver.

Rothera, the exchange Robinhood runs with trading firm Susquehanna International Group and regulated by the Commodity Futures Trading Commission (CFTC), passed $100 million in annualized revenue in its first full quarter.

Bernstein had forecast roughly $1.5 billion in quarterly revenue while keeping a $160 price target.

What Could Steady the Stock Before Wednesday’s Open?

Paying subscribers to Robinhood Gold rose 34% to a record 5.2 million. Customers added $15.7 billion in net deposits during the quarter.

“And we’re entering Q4 with strong momentum, as October Net Deposits have already topped $13 billion month-to-date,” read an excerpt in the release, citing Shiv Verma, CFO of Robinhood.

That October figure includes a $6 billion contribution from the Dell family to Trump Accounts, which Robinhood services.

Robinhood’s revenue now leans more on options, up 31% to $399 million, and event contracts. That mix carries its own exposure, as the city of Baltimore has sued prediction market operators over sports contracts.

Wednesday’s trading will show how much weight investors give the new revenue mix against a quarter of falling profit.

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