Robinhood launches feature to protect against trading volatility in crypto trading, invest change

By: Daniela Kirova
Daniela Kirova
Daniela was born in Bulgaria, grew up in Chicago, and then moved to Michigan to attend the University of… read more.
on Jul 28, 2021
  • App invests the difference after rounding up purchases to the nearest dollar
  • The company intends to raise about $2 billion in its IPO with a valuation of up to $35 billion
  • Robinhood’s revenue from cryptocurrency transactions was just under $87 million in Q1/2021

Exchange platform Robinhood is working on new features that would protect users from volatility typical of the cryptocurrency market and let them invest spare change. These features will be based on code hidden inside the company’s iPhone app test version, Bloomberg wrote. They plan to launch “round up investments” enabling customers to invest spare change and are exploring a rewards program tailored to the ones using the feature.

Is investing spare change the new thing?

This type of mini-investment is becoming more and more popular among stock traders. Typically, the respective phone apps enabling it connect to a debit or credit card. They invest the difference after rounding up purchases to the nearest dollar.

Shares set to go public July 29

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Robinhood’s shares will start trading publicly on Thursday, July 29. The company intends to raise about $2 billion in its IPO with a valuation of up to $35 billion. Some of the ways, in which the platform is challenging IPO convention (true to itself) include saving up to about a third of its shares for its own customers. Robinhood plans for this to be one of the biggest IPO allocations to retail investors in history.

Asked about Robinhood’s growth strategy, CFO Jason Warnick commented:

“There is more we can do with direct deposit and debit cards, especially given the opportunity to link rewards to our brokerage and crypto offerings.”

Protecting against volatility in cryptocurrency trading

Robinhood is also working to improve protection against cryptocurrency price volatility through the special code. The code sends a message, “To protect your orders against price volatility, we may sometimes skip your recurring orders or buy less than your chosen amount,” adding the app would let a user know if this happened and wouldn’t purchase more than what they’ve selected.

Impressive revenue growth for Robinhood

Earlier this year, the platform suffered an outage as the price of Dogecoin (DOGE/USD) boomed and crashed. This has not dampened investors’ enthusiasm for the exchange. Robinhood’s revenue from crypto transactions was just under $87 million in Q1/2021, accounting for about 17% of the total, compared to just 3% y/y.

During Robinhood’s roadshow, CEO Vlad Tenev commented:

“We’ve been doing a lot of work behind the scenes to provide our crypto customers with the functionality that they’ve been asking for. We want to introduce new features safely, and there’s a lot of items we have to get right from the start. For instance, making sure we get security right is a top priority.”

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