Cryptocurrency Trading Boosts Robinhood’s Revenue
Unsurprisingly, the good economic health of digital assets during the first part of 2021 has enabled certain market players to increase their turnover significantly. Robinhood is one such player, having benefited in particular from the increase in the number of transactions.
While targeting revenue in the $ 546-574 million range, the trading app met its targets by generating $ 565 million in the second quarter of the year (Q2 2021) for all of its activity. That’s a 131% increase from the same period in 2020 ($ 244 million).
More interestingly, half of these 565 million come from cryptocurrency trading alone, or $ 233 million, thus increasing from 17% to 51% compared to the first quarter of the year 2021 (Q1 2021). To give you an idea of the order of magnitude, revenues from traditional stock trading activity represent “only” $ 165 million in Q2 2021.
Another important data, the number of active users has more than doubled in one year, from 10.2 to 21.3 million, an increase of 130% still between the second quarter of 2020 and Q2 2021.
Dogecoin (DOGE), main source of Robinhood’s income
However, while the numbers announced are good, cryptocurrency trading at Robinhood does not appear to be very diverse. Indeed, it is in part thanks to the DOGE that this digital asset trading activity has increased significantly.
Indeed, trading in this single cryptocurrency represents 62% of all Robinhood crypto-asset transactions.
Beyond the raw numbers, addiction to canine cryptocurrency isn’t going to quell the rumor that Robinhood is the biggest whale in DOGE. Thus, it is possible that its very large capitalization and the increase in Robinhood’s turnover are partly linked.
Whether this rumor is real or unfounded, one wonders what would happen to Robinhood once the DOGE mania is over. And this is precisely what worries the future of the company.
👉 On the same topic – Robinhood suspected of being the biggest whale in Dogecoin (DOGE)
Robinhood revenue expected to decline in the near future
On the one hand, despite the good results of Q2 2021, Robinhood is far from profitable. Indeed, the losses amount to 464 million dollars for this same period, for expenses which are, a priori, not related to the trading of cryptocurrencies.
Importantly, on the other hand, Robinhood announced that it was suffering the drop in the price of digital assets last spring. This drop materialized in particular by a drop in the number of transactions.
As a result, Q3 (Q3 2021) revenue will not be as good as Q2 2021. The announcement immediately caused Robinhood’s stock price to drop on Wall Street, although its market capitalization remains very high, at around $ 41 billion.
It will therefore be necessary to monitor the future figures of the trading application to know if it can last and compete in the long term with giants such as Coinbase, Binance or Kraken, at least in the field of cryptocurrencies.
👉 To read – Robinhood raises an additional $ 200M to support its growth
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About the author: Benjamin Allouch
Lawyer specializing in digital law and personal data. He quickly became interested in bitcoin and blockchain technology, and founded the blog bitcoin-blockchain.fr. He is interested in the emergence of blockchain law and the legal consequences of this technology.
All articles by Benjamin Allouch.