Robinhood Trading App Clocks 2x Revenue In Q2 2021, HOOD Stock Drops 10% In After Hours

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by Bhushan Akolkar · 3 min read
Robinhood Trading App Clocks 2x Revenue In Q2 2021, HOOD Stock Drops 10% In After Hours
Photo: Nasdaq / Twitter

Robinhood admitted that Dogecoin remains the most traded cryptocurrency on the platform. The crypto trading app is also willing to add a crypto wallet feature in the future.

On Wednesday, August 18,  American financial services company and popular trading app Robinhood reported stellar earnings for the second quarter of 2021. During Q2 2021, Robinhood revenue more than doubled to a massive $565 million.

This is the first quarterly earnings report after its public listing last month in July. On a year-over-year basis, Robinhood’s revenue surged by a staggering 131%. However, crypto trading has played a crucial role in this revenue bump.

Of the $546 million in total revenue, crypto trading alone accounted for $233 million. Back in Q2 2020, the revenue from crypto trading was just $5 million. The share f crypto asset trading in the revenue jumped more than 51%, from 17% during Q1 2021. Furthermore, over 60% of cumulative net funded accounts traded crypto in this quarter.

Revenue from the clients’ trading options stood at $165 million during the last quarter. Similarly, equity trading contributed to $52 million, one-fifth of crypto trading revenue. The zero-fee trading app Robinhood has been quite popular among millennials. But the revenue segmentation between crypto and stocks clearly shows where the trend is moving ahead.

On Wednesday, August 18, the Robinhood Markets Inc (NASDAQ: HOOD) stock surged nearly 7% during trading hours. The HOOD stock ended at a price of $49.80 on Wednesday. It has gained more than 43% since its listing in late July last month. 

Robinhood Rings Alarm for Q3

While it has been a great second quarter for the trading app, the company has warned about the coming quarter. In a warning to investors, Robinhood predicts a slowdown in trading during the third quarter. The company noted:

“For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter”.

These comments have put pressure on the HOOD stock. In the after-market hours, the HOOD stock crashed 9.34%. The company has three analyst ratings only so far. Speaking to Yahoo Finance, Matt Maley of Miller Tabak + Co said:

“It’s still hard to know what the right long term value of this company should be. I’m one who thinks the longer term players should build their position over time because the stock will be very volatile”.

Interestingly, Robinhood specifically named Dogecoin as the major driver for its crypto transaction revenue. The company noted: “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”.

During the conference call, one person asked if Robinhood will integrate crypto wallets. This facility will allow users to send and receive digital currencies without first converting them into USD. Speaking on it, Chief Executive Officer Vlad Tenev said:

“It’s something that our teams are working on. The ability to deposit and withdraw cryptocurrencies is tricky to do with scale, and we want to make sure it’s done correctly and properly.”

The company is also mulling to add some social media features to its platform.

Market News, News, Stocks
Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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