Robinhood warns a crypto revenue drop is coming amid IPO filing

Stock and cryptocurrency buying and selling app Robinhood is anticipating its quarterly revenue to lower primarily based on considerably excessive buying and selling quantity earlier this yr.

In an modification to its Form S-1 filed with the United States Securities and Exchange Commission on Monday, Robinhood reported that its buying and selling exercise for January and February was “particularly high” however had dropped by the top of the second quarter of 2021. According to the buying and selling app, it expects its Q3 2021 revenue to be decrease “as a result of decreased levels of trading activity relative to the record highs in trading activity, particularly in cryptocurrencies.”

Robinhood reported its whole revenue skilled year-over-year development of greater than 123%, from $244 million on the finish of the second quarter of 2020 to between an anticipated $546 million and $574 million on June 30. The distinction in revenue was pushed partially as a consequence of “increased trading activity related to options and cryptocurrencies.”

According to the buying and selling app, 17% of its whole revenue for Q1 2021 was derived from transaction-based revenues earned from crypto transactions, in contrast with 4% within the earlier quarter. Robinhood reported that greater than 9.5 million prospects traded roughly $88 billion in crypto within the first quarter of 2021, whereas it had $12 billion in crypto belongings underneath custody as of March 31.

In addition, 34% of this quarterly revenue was straight attributable to Dogecoin (DOGE) transactions — the price of the token surged significantly in late January earlier than reaching an all-time excessive of greater than $0.68 on May 6. Robinhood claimed that its business may very well be adversely affected “if the markets for Dogecoin deteriorate or if the price of Dogecoin declines” with out related demand for different tokens on the app.

The filing comes because the buying and selling app is making ready to go public on the Nasdaq trade utilizing the ticker “HOOD.
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” On July 1, Robinhood filed a Form S-1 registration assertion with the SEC, saying it supposed to move forward with an initial public offering for its Class A typical inventory. The firm initially stated it deliberate to boost $100 million within the debut, however the newest filing suggests an providing of greater than $2.5 billion for 60.5 million of the shares for as much as $42.

Related: SEC inquiry regarding Robinhood’s crypto business reportedly delays IPO

Robinhood is additionally reportedly persevering with to face scrutiny from regulators within the United States. Last month, the Financial Industry Regulatory Authority penalized the trading app roughly $70 million primarily based on the outcomes of an investigation alleging Robinhood had brought on “widespread and significant harm” to hundreds of customers and exhibited “systemic supervisory failures” beginning as early as September 2016. The buying and selling app stated it reached an agreement-in-principle with the regulatory physique to pay a number of the fines on a “no admit, no deny basis.”