Crypto price drop will negatively impact Q3 revenue, says Robinhood

on Jul 20, 2021
  • Robinhood app warns that its revenue in Q3 2021 might be significantly lower than in previous quarters.
  • The company pointed out that there has been a significant drop in crypto activity after the falling prices.
  • So, the third quarter might see a lot less earnings when compared to the previous ones.

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Robinhood is one of the more popular stock and crypto exchanges out there, and earlier this year, it saw very high trading volume. However, with the situation regarding crypto prices changing in Q2, the company has warned that its quarterly revenue is likely to be significantly lower than before.

Robinhood explains the expected drop in revenue

Robinhood added the warning in its amendment to the Form S-1 that it filed with the US SEC yesterday, July 19th. In it, the company noted that trading activity was particularly high earlier this year, in January and February. However, as it neared the end of the second quarter of this year, trading activity saw a significant drop. Given the situation, the company expects its Revenue in Q3 2021 to be even lower due to the decrease of trading activity that is still holding on.

Of course, this will only be low in comparison with record highs that the company has seen earlier this year, especially when it comes to cryptocurrencies. The company’s total revenue experienced year-over-year growth of over 123%. At the end of Q2 2020, it had $244 million, while by the end of Q2 2021, that amount has gone up to between an expected $546 million and $574 million.

Q1 2021 has seen as much as 17% of its total revenue coming from crypto transaction fees. In the quarter before that, the company earned only 4% of its total revenue from this source. Q1 2021 also saw over 9.5 million customers trading approximately $88 billion in crypto, and by the end of the quarter, the company had $12 billion in crypto assets held under custody.

Not only that, but 34% of this quarterly revenue came directly from DOGE/USD transactions, as the memecoin’s price skyrocketed in early 2021. Robinhood warned before that its business could be strongly affected if demand for Dogecoin drops, and no new coin rises to replace it.