Robinhood crypto trading revenue falls 78% in Q3

Robinhood, the stocks and cryptocurrencies trading app, reported  far worse than expected figures for Q3. On the back of the news, the price of the stock fell as much as 11%, with a net loss for the quarter of just over $1 billion.

With the publication of its 3rd quarter results, Robinhood’s stock price tumbled sharply. The total quarterly revenue was $365 million, which was a lot lower than third party estimates of around $431 million. 

The revenue was also markedly below the 2nd quarter figure of $565 million. Of that 2nd quarter amount, the crypto transactions contribution was $233 million, of which 62% was made up of DOGE alone.

CEO of Robinhood, Vlad Tenev, said of the earnings call:

"In Q3, crypto activity came off record highs leading to fewer new funded accounts and lower revenue as expected. Historically, our growth has come in waves. The surges have come during periods of increased volatility or market events." 

According to an article on Business Insider, the company expects lower levels of crypto trading to persist into Q4. Monthly active users have fallen to 18.9 million, down from 21.3% in Q2.

Jason Warnick, CFO of Robinhood, said:

"Our industry sees a typical seasonality curve that shows higher growth in the first quarter of the year versus the last three quarters. We continue to monitor regulatory developments relating to market structure matters such as statements from the SEC on payment for order flow, cryptocurrency regulation, option trading due diligence, and digital engagement practices."

Opinion

The reduction in revenue and the other negative sounding figures given out by Robinhood are really not surprising given the 50% reduction in the bitcoin price after the May correction.

What is surprising though, is that the company is predicting a continuation into Q4. This is historically a very good quarter for crypto, and with many analysts bullish, and predicting a bull market throughout this final quarter, it could be imagined that apps such as Robinhood would see a larger number of retail users jumping onboard.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.