Sarah Tran
Independent Analyst
- Cryptocurrency trading revenue at Robinhood fell a whopping 78% in the third quarter compared to the second quarter.
- Robinhood shares tanked as the firm posted lower than expected digital asset trading revenue.
- The platform stated if there are no changes to the market environment, the firm may continue to see quarterly revenues of less than $325 million.
Robinhood’s shares recently fell below its initial public offering price after the trading platform reported lower revenues than expected for the third quarter. Cryptocurrency trading revenue fell from $233 in the second quarter to $51 million in the third.
Crypto trading slowdown could continue
In the third quarter, Robinhood posted $51 million in transaction-based revenue derived from cryptocurrencies, resulting in a 78% decline compared to Q2. The firm’s shares have fallen in tandem with its digital asset trading revenue, which dropped around 10% before making a slight recovery.
The company’s $233 million in crypto trading revenue in Q2 was primarily driven by Dogecoin trading, as DOGE represented 62% of the total digital asset trading revenue.
Wall Street analysts predicted $437.1 million for total net revenues for the firm. However, Robinhood posted $365 million in Q3.
According to Robinhood, its business has been impacted by factors including market volatility, retail trading behavior and unanticipated market events that may continue to be the case in the next quarter.
The report further predicted that if the market environment does not change, the firm believes that this may result in quarterly revenues that do not exceed $325 million, with full-year revenue of less than $1.8 billion.
The CEO of Robinhood, Vlad Tenev, remained optimistic for the firm’s prospects in cryptocurrencies and highlighted the company's new products and services built for retail traders in the third quarter, including a digital wallet that enables users to deposit and withdraw crypto assets to and from the platform.
He further noted that over one million users have joined the firm’s digital wallet waitlist and believes that the retail trading platform could become one of the most trusted and intuitive platforms for crypto investors.
Options for buying and selling cryptocurrencies have broadened, as payment companies such as Venmo have also jumped on the digital asset bandwagon. The market for crypto wallets has also saturated and grown as adoption for the new asset class increases.
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