Robinhood’s recent revelation of the huge boost cryptocurrencies have contributed to its second-quarter financial earnings worries some financial analysts, in large part due to the “outsized” role that Dogecoin (DOGE) trading has played.
In a note to investors this week, Steven Cubak of Wolfe Research warned that “Robinhood’s growth within cryptocurrencies is not negligible, but Dogecoin’s huge contribution simply cannot be ignored. “
As reported, Robinhood’s second quarter results revealed that cryptocurrency trading had risen to account for 41% of its revenue and that more than 60% of the app’s funded accounts traded crypto in the quarter.. The company generated $ 233 million of cryptocurrency trading services for the second quarter of 2021, up from $ 5 million for the entirety of 2020.
A staggering 62% of Robinhood’s crypto revenue in Q2 2021 derived from Dogecoin’s operations during the major social media-driven pump of the meme coin, accounting for close to one-third of the total transaction revenue of Robin Hood.
In your investor newsletter, Chubak tracked this exponential growth in Dogecoin’s contributions to company revenue, from 6% in Q1 2021 to the 26% mark in Q2.. He added that Dogecoin’s trading volumes have dropped roughly 78% in the third quarter and are now below Q1 levels. He warned:
“We believe the 3Q slowdown could be much sharper than many investors expected […] This may not affect fintech investors with a longer investment horizon, but it may give financial investors more conviction in the short thesis. “
Having launched its IPO (IPO) this summer in an initially disappointing Nasdaq debut, Robinhood shares quickly became so volatile that the stock market was forced to stop trading multiple times. Robinhood had done the same on its app in January, much to popular outrage, as Dogecoin (DOGE) surged by 900%.
At the time of writing, Robinhood shares are down just over 5% on the day.