From Laura Shin | Unchained Podcast
Crypto trading on Robinhood is poppin’.
The investment app just completed its first quarter as a publicly-traded company. According to Robinhood’s earnings report, it appears that crypto trading had an outsized impact on the company’s bottom line, as evidenced by the fact that 60% of Robinhood users traded in crypto in Q2.
At $565M, revenue more than doubled since Q4 2021. The majority of Robinhood’s revenue, roughly 80%, is tied to transaction fees extracted from traders buying/selling options, cryptocurrencies, equities, and other investment products.
As you can see in the chart above, of that 80% brought in via transaction revenue, cryptocurrency trading accounted for more than half of that income — meaning that 41% of Robinhood’s total revenue is the direct result of crypto trading. The company’s filing also mentioned that Dogecoin trading was the crypto of choice for customers, noting, “62% of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin.”
Robinhood’s reliance on crypto trading seems to be growing. In Q4 2020, crypto trading only accounted for 2% of the company’s revenue. In Q1 2021, only 17% of the investment app’s total revenue was derived from crypto trading. To put that in perspective, crypto trading revenue on Robinhood grew over 4,000% since Q4 2020.
At publishing time, $HOOD is trading at $45.43, down 9% on the week.
Robinhood is not a company you should trust. When you’re not paying for the product, you are the product. Front-running a million investors just a few minutes early can make somebody millions of dollars in a single day, and that’s what’s happening with the robinhood app.
Also, their earnings were full of dogecoin transactions, meaning they rely on a meme coin to stay afloat. Not a good look for any company.