Robinhood, the popular mobile app that facilitates crypto trading without a commission fee, has seen a massive dip in crypto revenue. As the popular trading platform laves the third quarter of 2021, it goes through a 78% decline in crypto revenue over second-quarter numbers.
The resulting decline also led to a drop in stock prices by 15% after the company published its weak third-quarter results last week. Overall revenue of the company declined to $365 million as Robinhood’s crypto division, which is thought to be a long-term driver of growth by investors, only earned $51 million.
The company’s total number of user accounts also dropped to 22.4 million, while fees related to stock and options trades also dipped slightly.
Robinhood had previously earned a $233 million revenue in the second quarter, a far cry from it made in the third quarter of 2021. The sharp decline is attributed to the low trading volumes of the meme-inspired cryptocurrency Dogecoin even though the price of Bitcoin gained plenty throughout the third quarter.
Dogecoin has been the company’s major source of crypto revenue for much of 2021. Robinhood’s crypto revenue has depended on the meme-inspired cryptocurrency which exploded in popularity at the start of this year.
At the peak of its popularity, the price of Dogecoin had surged by 900% in less than a month in the second quarter of 2021. Dogecoin reached an all-time of $0.7376, but in the following months, the price of the meme token receded significantly and languished at around $0.20.
Robinhood’s surging crypto revenues throughout the second quarter are due to the massive trading volume of Dogecoin. At the time, Dogecoin accounted for 62% of the total crypto trading revenue for Robinhood. Naturally, the decline in the meme token’s popularity played a vital role in the diminished revenue of the company in the third quarter.
The company’s total revenue in the third quarter amounts to $365 million which is significantly lower than its total revenue of $565 million in the previous quarter. The company’s total net revenues are up by 35%, while revenue from crypto transactions is up by 860% compared to the similar timeframes in 2020 on a year-to-year basis.
The company expects that certain factors that led to the reduced earnings will continue till the end of this year. in a press release, the company warned that lower retail activity may continue and affect the fourth-quarter revenues.
