The boom in cryptocurrency trading contributes to a doubling of revenue for Robinhood in the second quarter of the year. Robinhood, al first earning report after the debut on Wall Street, reported revenues more than doubled in the second quarter to $ 565 million (+ 131%), supported by a massive increase in cryptocurrency trading (over + 4,500%).
The app, which became popular as it made free stock trading for a new generation of investors, reported cryptocurrency trading revenues of $ 233 million, more than half of all transaction-based revenues of $ 451 million for the second. quarter.
Dogecoin mania pushes the numbers of the trading app
The share of revenue from cryptocurrencies thus rose to over 51% from 17% in the first quarter. And in detail as much as 62% of the revenue related to cryptocurrency trading is derived from dogecoin, the meme-inspired digital currency originally created as a joke.
Robinhood has included ones in his prospectus and quarterly report specific risk linked to dogecoin, noting that his business could be damaged “if the dogecoin markets deteriorate or if the dogecoin price falls.”
The App founded by Vladimir Tenev and Baiju Bhatt registered in the 2nd quarter a net loss of $ 502 million, or $ 2.16 per share, with losses primarily as a result of the fundraising efforts it undertook earlier in the year.
On July 29, Robinhod made his Wall Street debut, identifying himself as the worst IPO performance in the US market for a company of its size. In subsequent sessions, the price of Robinhood shares had partially recovered, sending strong volatility also due to rumors about the intention of some of the investors involved in the February 2021 loan to profit from their share, thus causing the abrupt withdrawal from the highs ( touched in the $ 85 area, yesterday the stock closed just below $ 50).
Prudent guidance weighs on the stock
In the pre-market the stock today marks over -11% in the $ 44 area.
Investors are worried about cautious guidance. Robinhood management expects one in the third quarter less trading activity across the industry and this will result in lower revenues. “For the three months to September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry will result in lower revenues and significantly fewer new accounts funded than in the previous quarter,” the company said. .
Robinhood also said it will need to increase its spending on regulatory and compliance functions, as well as allocate up to $ 1 billion for stock-based compensation. Operating expenses increased to $ 501 million in this quarter alone.
“Shareholders may have to wait a while before they see a return to profit,” he says Michael Hewson, chief market analyst di CMC Markets.