Robinhood’s Crypto Revenue Drops 78% in Q3 Due to Floundering DOGE, But New Coins like SHIB Not Coming until Regulatory Clarity
Robinhood Chief Financial Officer said they are “incredibly optimistic about crypto.” While customers want more coins and the ability to earn interest through lending or staking, they’re not going “to be the first mover” in this regulatory environment.
Robinhood reported $51 million in revenue from cryptocurrencies for the third quarter ended September 30, 2021.
This represents a more than 78% drop from $233 million in the second quarter and an increase of 860% compared to $5 million in the third quarter of 2020 as “crypto activity came off record highs.”
This drop in transaction-based revenue from crypto can only be attributed to the lack of activity in Dogecoin as last quarter DOGE made up 62% of Robinhood’s crypto transactions volume. In Q2, DOGE price went to its all-time high above $0.73, while in Q3, it traded in the range of $0.16 and $0.35. DOGE 0.98% Dogecoin / USD DOGEUSD $ 0.09
$0.000.98% Volume 515.16 m Change $0.00 Open $0.09 Circulating 132.67 b Market Cap 12.23 b 1 y Ray Dalio says, Bitcoin Is An “Alternative Money” While NFTs An Investment; May Also Become A Type of Money 1 y Dogecoin Foundation Working with Ethereum Co-Founder Vitalik for DOGE Staking Proposal 1 y DOGE Sucking Liquidity from Crypto Market Again, Tesla to Accept Dogecoin Again For Merch
“Looking back at Q2, we saw a huge interest in crypto, especially doge, leading to large numbers of new customers joining the platform and record revenues,” Robinhood CEO Vlad Tenev said on an earnings call with analysts.
The co-founder also noted that in the last quarter, “there were millions of new funded accounts that came for cryptocurrencies, particularly dogecoin.”
The original meme coin is seeing competition from Shiba Inu (SHIB), which has now hogged all the limelight to hit a new all-time high today at $0.000060. As we have been reporting, SHIB has been seeing more volume on leading exchanges Binance and Coinbase than Bitcoin and Ether, and the community has been asking Robinhood to list the meme coin as well. SHIB 0.93% Shiba Inu / USD SHIBUSD $ 0.00
$0.000.93% Volume 427.91 m Change $0.00 Open $0.00 Circulating 10 t Market Cap 7.8 b 1 y ETHBTC Hits New 2021 High, Dogecoin and Ethereum Price Leading Google Trends in 2021 1 y Terra Stablecoin Supply Surges by $5B In Under A Month, Bitcoin in Macro’s Clutches, SHIB Added to Balance Sheet 1 y Twitter CEO & Bitcoiner Jack Dorsey is Out, Ethereum Is In BTC 0.70% Bitcoin / USD BTCUSD $ 23,134.77
$161.940.70% Volume 26.61 b Change $161.94 Open $23,134.77 Circulating 19.28 m Market Cap 446.15 b 1 y SEC Commissioner says NFTs Might Fall Within Their Jurisdiction, Gensler Hires Senate Aid for Crypto Policy 1 y A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 1 y Bitcoin and Ether Dump More Going Into Year-End, ETH Killers Showing Great Momentum ETH 2.25% Ethereum / USD ETHUSD $ 1,675.16
$37.692.25% Volume 8.41 b Change $37.69 Open $1,675.16 Circulating 122.37 m Market Cap 205 b 1 y Coinbase Predicts Substantial Growth of Newer L1 Chains & Institutionalization of Regulated DeFi 1 y A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 1 y The Sandbox Game Is Migrating to Ethereum Sidechain Polygon and Launching A DAO in 2022
But for now, there are no such plans of adding new coins; Tenev said that they hear this “loud and clear” but are waiting for regulatory clarity.
“We're having to carefully evaluate whether we can add new coins in a way that's safe for customers and in line with regulatory requirements.”
“We're a regulated entity and we're hopeful to get some clarity soon on coins. So until then we'll continue to work with our regulators to hopefully land in a place where regulations allow for innovation and are applied evenly across the industry.”
Robinhood never had "crypto" revenue, they had dogecoin revenue.
This chart makes a lot more sense when you view it through that lens and consider how SHIB regularly does magnitudes more volume than DOGE. pic.twitter.com/F1bzItjsvf
— Hsaka (@HsakaTrades) October 26, 2021
Much like adding new coins, the regulatory environment surrounding lending and staking products in crypto is also “uncertain and evolving.”
Chief Financial Officer Jason Warnick also said that they are “incredibly optimistic about crypto.” While customers want more coins and the ability to earn interest through lending or staking, they’re not going “to be the first mover, particularly in this regulatory environment.”
In the earnings call, Robinhood executives fielded many questions about crypto. When asked about adding more crypto features, Tenev said their crypto wallet, whose waitlist is joined by more than a million users, is coming soon. The wallet is expected to be rolled out selectively in 4Q & widely in 1Q22.
Rolling out wallets “will go a long way towards addressing the primary pain point that customers feel right now,” said the CEO.
Tenev further shared that they have been “investing a lot in the crypto team,” which started a year ago fairly small but is now rolling out recurring purchases and 24/7 phone support. Overall, he feels,
“we're still quite early in the crypto space and Robinhood sees a lot of opportunity ahead of us.”
Much like crypto, equity trading revenue fell 27% from a year ago to $50 million, while total revenue rose 35% from a year earlier to $365 million. Options revenue was also up 29% to $164 million.
Robinhood reported 22.4 million funded accounts, down slightly from last quarter but up 96.5% from a year earlier. The average revenue per user also decreased 36% to $65 versus $102 in 3Q20.
The missed expectations sent HOOD share prices down by 8% to now trade at $39.57. Robinhood went public late in July on the Nasdaq with an IPO price of $38 per share.