(Reuters) - Trading app Robinhood Markets ( HOOD ) is expected to report its highest quarterly revenue in nearly three years, helped by a steady rebound in equity markets and crypto trading.

Bets on global interest rate cuts sent U.S. stocks and bitcoin to record highs earlier this year and attracted traders back to markets, helping the retail investor-focused brokerage earn more transaction-based revenue.

Robinhood, at the heart of the meme stock frenzy in 2021, is bouncing back from a slowdown in retail trading activity that followed the pandemic-led trading activity surge.

"In the core business, we saw a significant rebound in volumes this quarter across equities, options and crypto with total volumes up nearly 20% in Q1 through February reported metrics," J.P.Morgan analysts said.

The strong retail trading activity sent Robinhood's shares up 58% in the first three months of the year, the sharpest quarterly stock surge since its listing.

THE CONTEXT

Data from research firm Apptopia showed daily active users for Robinhood surged 65% in March from a year earlier, while total new mobile app downloads jumped 94% during the same period.

Menlo Park, California-based Robinhood, which made commission-free trading mainstream, will benefit from a jump in net interest revenue. Robinhood lets certain customers borrow money to purchase securities.

Net interest revenue, the biggest driver of the company's top line, is expected to jump 24% to $258.24 billion in the first quarter, according to LSEG data.

"Online retail brokers saw solid growth in both trading volumes and margin loan balances, and should continue to benefit from higher-for-longer rates," said Patrick Moley, analyst at Piper Sandler.

Robinhood's assets under custody (AUC) breached the $100 billion mark for the second consecutive month in February with the company reporting a surprise profit in the final quarter of 2023 and aiming for profitable growth in 2024.

THE FUNDAMENTALS

** Robinhood, which reports first-quarter results on Wednesday, is expected to post its strongest quarterly revenue since the second quarter of 2021

** Analysts forecast a 24% rise in revenue to $548.61 million, helped by net interest revenue growth - LSEG

** Crypto trading revenue is likely to more than double from a year earlier to $80 million

WALL STREET SENTIMENT

** The average recommendation of 17 brokerages covering Robinhood is "hold"

** Median price target for the company is $19, up 65% from three months ago

** Robinhood trades 64.01 times its forward earnings estimate, compared to industry median of 10.97

** Stock hit a more than two-year high in late-March, but has more than halved in value since its July 2021 market debut