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Robinhood drew 34% of crypto revenue from being ‘overexposed’ to Dogecoin (DOGE)


Fee-free buying and selling platform Robinhood reveals it depends closely on Dogecoin. The agency admits lessening demand for the controversial meme token might negatively affect its operations.

With a YTD peak of just about +15,000%, the efficiency of DOGE has shocked many analysts. Nonetheless, contemplating that this appears primarily pushed by sentiment reasonably than fundamentals, some imagine it’s solely downhill for Dogecoin from right here.

In that case, this might spell hassle for Robinhood because it makes an attempt to go public.

Dogecoin makes up a big a part of Robinhood’s income

Robinhood Markets, Inc. has filed its Form S1 Registration Assertion with the Securities and Alternate Fee (SEC) in reference to going public.

In doing so, the agency revealed its financials for the primary time. For the yr to December 2020, complete income was $959 million; that is up 245% from the earlier yr, at $278 million. On the similar time, internet earnings got here in at $7 million, versus a lack of $107 million for the yr to December 2019.

Figures for Q1 2021 present an enormous surge in income, coming in at $522 million versus $128 million for a similar interval within the prior yr.

Underneath dangers, the shape recognized a big proportion of its income comes from Dogecoin buying and selling. The assertion says that its operations may very well be “adversely affected” if demand for Dogecoin transactions declines.

“A considerable portion of the current development in our internet revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin. If demand for transactions in Dogecoin declines and isn’t changed by new demand for different cryptocurrencies obtainable for buying and selling on our platform, our enterprise, monetary situation and outcomes of operations may very well be adversely affected.”

Robinhood stated Dogecoin buying and selling accounts for 34% of its cryptocurrency buying and selling income in Q1 2021. Whereas it solely accounted for 4% in This fall 2020.

SEC has issues with gamification

Robinhood caught on throughout the begin of lockdown when youthful, arguably much less skilled, folks turned to commerce.

Its monthly active users have greater than doubled because the final yr, with 17.7 million as of Q1 2021, up from 8.6 million in the identical interval final yr.

The rising recognition of Robinhood was famous by authorities who took exception to the platform’s “gamification” of buying and selling.

SEC Chair Gary Gensler spoke about these issues throughout a current Home Monetary Companies Committee. He recognized game-like options similar to factors, rewards, leaderboards, bonuses, and competitions designed to extend engagement.

“Many of those options encourage buyers to commerce extra,” Gensler added, “Some tutorial research recommend extra lively buying and selling and even day buying and selling leads to decrease returns for the typical dealer.”

In relation to this, Robinhood commented that it intends to make “vital adjustments to our enterprise mannequin.”

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