In the wake of the March 2020 Covid-19 financial meltdown, user growth in investment apps such as Robinhood skyrocketed as retail investors piled into stocks and crypto, particularly memecoins such as DOGE. Things have since taken a rather dramatic turn as the company recently reported results reflecting a 78 percent decline in crypto revenue, much of that blamed on DOGE.
Slowdown in Crypto Hits Revenue
This week, the company revealed in its Q3 earnings report that crypto revenue had dropped to US$51 million – a staggering 78 percent decline from Q2’s US$233 million. To be fair, it is still significantly up over the past year where in Q3 2020, it recorded only US$5 million in crypto revenue – a 880 percent increase over the period. In any event, some remained unimpressed.
Notwithstanding, total net revenues increased by 35 percent to US$365 million while other financials included a loss of US$1.32 billion. This represents a substantial improvement on the US$11 billion loss recorded in Q3 of 2020.
Robinhood and DOGE – A Match Made In Heaven?
Few could have imagined a few short years ago that a coin created as a joke would have a market capitalisation of US$34 billion, much less comprise 62 percent of a listed company’s crypto revenue. To provide some context, DOGE would rank approximately 238th in the S&P 500 index. Apple takes the number one spot at US$2.4 trillion.
Given that over 60 percent of Robinhood’s crypto revenue came from a coin whose value is derived by FOMO, speculation and celebrity endorsements, it isn’t surprising that revenues collapsed as interest in DOGE waned in favour of the latest canine-themed memecoin, SHIB.
Robinhood CFO Jason Warnick indicated on a call with reporters that customers had shifted focus towards equities in Q3, whereas:
In Q2, the story was about crypto, especially DOGE.
Jason Warnick, Robinhood CFO
Despite the significant decline in crypto revenue, CEO Vlad Tenev remained upbeat about some of the more exciting developments within the company:
This quarter was about developing more products and services for our customers, including crypto wallets. More than one million people have joined our crypto wallets waitlist to date. With 24/7 live phone support, we believe that Robinhood is becoming the most trusted and intuitive platform for retail and crypto investors.
Vlad Tenev, CEO, Robinhood
Users are looking forward to the release of Robinhood’s crypto wallet and hoping that the company lists SHIB later this year. Warnick has refused to rule it out but cited ongoing regulatory concerns as a possible reason not to.
Despite being forced to pay a US$70 million fine earlier this year for misleading its customers, they appears committed to investing in memecoins through the popular platform. It wouldn’t therefore be surprising to see SHIB pop up as a trading option in the near future.
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