Robinhood Increases Revenue By 131% In Q2, Shares fall

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Revenue of stock trading app Robinhood Markets Inc (NASDAQ:HOOD) more than doubled in the second quarter to $565 million, as revealed by the company’s first earnings report on Wednesday.

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Q2 2021 hedge fund letters, conferences and more

Impressive Results

According to data, Robinhood’s revenue grew by 131% from $244 million the same quarter last year to $574 million, surpassing the firm’s forecast of $546 million.

As reported by CNBC, the main driver behind the impressive figures is crypto trading, which totaled $233 million, “more than half of all the transaction-based revenue of $451 million for the second quarter.” Its share of revenue soared to more than 51% from 17% in Q1.

“More than 60% of cumulative net funded accounts traded crypto in the quarter. In the second quarter of 2020, crypto-based revenue was just $5 million.”

However, Robinhood said that trading could slow down into Q3 following a record-breaking second quarter. Upon the statement, shares dropped more than 8% in after-hours trading ––a net loss of $502 million or $2.16 per share–– as investors ask themselves whether crypto trading will keep driving the good results.

In the earnings release, the company asserted that “For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter.”

Crypto Trading Soars

After its introduction in 2018, crypto trading on Robinhood has skyrocketed in the last couple of years. Users of the platform can trade up to seven digital coins, including bitcoin, ethereum, and litecoin.

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“Dogecoin, meme-inspired token, accounted for 34% of its cryptocurrency transaction-based revenue in the first quarter,” CNBC reports.

The company said in a statement: “If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected.”

Robinhood was one of the most anticipated IPOs this year and its shares have nothing but rollercoasted ever since. Stocks flaked upon initial trading before a meme stock moment sent it up by 50% among retail investors.

In early August, Robinhood stock also hit a bump when news about some shareholders selling up to 97.9 million shares broke.

According to CNBC “Robinhood said the SEC informed the brokerage on August 13 that they are reviewing the resale S-1 and that no sales can be made until the SEC staff completes their review and declares it effective.”

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