Robinhood Suffers 78% Plunge in Crypto Revenues
Market Musings

Robinhood Suffers 78% Plunge in Crypto Revenues

1 month ago
2m

The mania surrounding Dogecoin has dried up — hitting the company hard. To make matters worse, the exchange is yet to list SHIBA INU.

Robinhood Suffers 78% Plunge in Crypto Revenues

Table of Contents

Robinhood’s latest financial results looked impressive on a year-to-year basis — with total net revenues up 35% to $365 million in the third quarter, and crypto transaction revenues surging 860% compared with the same period a year earlier. 

But when the comparisons are made quarter to quarter, the figures look bleak — and this is why Robinhood’s share price fell sharply in after-hours trading on Tuesday evening and Wednesday morning.

Although the trading platform pocketed $51 million in fees from crypto transactions during Q3, that’s a 78% drop from Q2. Much of this has been linked to the diminishing demand for Dogecoin. The memecoin’s price has cooled dramatically since experiencing an unprecedented surge in interest earlier this year. 
The disappointing performance also resulted in Robinhood falling well short of analysts’ estimates for total revenue — coming in $58 million shy of the $423.9 million that had been expected.

Listen to the CoinMarketRecap podcast on Apple PodcastsSpotify and Google Podcasts

Drilling into the Data

Robinhood’s figures also show that the number of monthly active users has fallen substantially over the past three months — from 21.3 million to 18.9 million in the latest quarter. JPMorgan analysts had predicted this would be the case last month, noting that the number of new app downloads had started to stall.
And here’s another stat that makes for uncomfortable reading: average revenues per user stood at just $65 in Q3. That’s far lower than any of the four quarters that came before — and compares with the $112 seen in Q2.

To add insult to injury, this has been matched by a dramatic increase in operating expenses, with Robinhood having to bolster its infrastructure after being caught out when meme stocks had their moment.

One number that might make shareholders choke on their coffee concerns the $1.37 billion loss before income tax that was seen in Q3 — a stark contrast to the $11 million dip in the red seen over the same period a year earlier.
Robinhood had warned that its performance could vary dramatically based on demand for digital assets, and back in the second quarter of 2021, DOGE accounted for 62% of all crypto transaction revenue.

Indeed, ahead of its IPO, the trading platform had even warned that the company’s financials could be hurt “if the markets for Dogecoin deteriorate or the price of Dogecoin declines.”

When Robinhood held its initial public offering in July, the share price was set at $38. But as of 8pm New York time last night, it had slumped to $36.22 — down by about 10%.

The company is yet to add SHIBA INU to the list of cryptocurrencies it supports, despite hundreds of thousands of users signing a petition urging it to do so.