Robinhood IPO filing reveals $11.6 billion in crypto holdings, substantial portion of revenue from Dogecoin

Online brokerage firm Robinhood filed a Form S-1 with the United States Securities & Exchange Commission (SEC) as it prepares to go public. 

Dogecoin takes the spotlight on Robinhood

Robinhood, a popular trading app for stocks, options, gold and cryptocurrencies, filed for a public offering that could be worth up to $100 million, according to the document filed with the SEC. Its shares on the Nasdaq would be traded under the ticker symbol HOOD. 

The company has been a popular destination for crypto trading, especially among millennials, and could rival Coinbase for digital asset trading in the future. The firm has made itself a significant player in the crypto industry, with 9.5 million users trading digital assets in the first quarter of 2021. 

With the rise of popular meme cryptocurrencies, Robinhood was able to rake in $7.5 million in profits on $959 million in revenue for 2020. The firm’s crypto business witnessed a tremendous increase in the amount of Bitcoin and other digital assets it holds on behalf of its customers. 

By March 31, the value of crypto holdings held by Robinhood reached nearly $11.6 billion, up from the $480 million held just a year ago. 17% of Robinhood’s overall revenue came from crypto trading in the first quarter of 2021. 

34% of the total digital asset trading revenue came from Dogecoin, which represents 6% of the overall revenue. The brokerage firm stated this would be a risk if “demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies.”

Negative sentiment and perceptions of Dogecoin and the increased availability of DOGE on other crypto trading platforms could potentially cause a decline in demand for the coin on Robinhood. The filing reads:

A substantial portion of the recent growth in our net revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin. 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’s crypto offerings include a variety of digital assets beside Bitcoin and Dogecoin. Currently, customers are faced with the limitation of not being able to move cryptocurrency holdings off its platform. However, this is likely to change in the near future, according to Robinhood Crypto COO Christine Brown.

The trading firm has first announced its intention to go public in March, but the process faced multiple obstacles amid legal uncertainty with the SEC over cryptocurrencies, as well as other aspects of its business.