Robinhood Warns Crypto Revenue Slump Amid IPO Filing

Stock and cryptocurrency trading app Robinhood expects its quarterly earnings to decline due to considerably high trade volume earlier this year.

In a modification to its Form S-1 filed with the US Securities and Exchange Commission on Monday, Robinhood said its trading activity for January and February was “particularly high” but had fallen by the end of the second quarter of 2021. The trading app expects its third-quarter 2021 revenue to be lower due to a decrease in the levels of trading activity, particularly in cryptocurrencies.

Robinhood said its total revenue grew more than 123% year-over-year, from $ 244 million at the end of the second quarter of 2020 to between $ 546 million and $ 574 million forecast for June 30. The difference in proceeds was driven in part due to “increased trading activity related to options and cryptocurrencies.”

According to the app, 17% of its total revenue for the first quarter of 2021 came from transaction-based revenue generated from crypto transactions, compared to 4% in the previous quarter. Robinhood reported that more than 9.5 million clients traded approximately $ 88 billion worth of crypto in the first quarter of 2021, while it had $ 12 billion worth of crypto assets in custody as of March 31.

Additionally, 34% of that quarterly revenue was directly attributed to Dogecoin (DOGE) transactions – the token’s price rose significantly in late January before hitting an all-time high of more than $ 0.68 on May 6. Robinhood claimed that his business could be adversely affected “if the Dogecoin markets deteriorate or the price of Dogecoin falls” without similar demand for other tokens in the app.