Robin Hood’s profits more than doubled to $ 565 million in the second quarter, supported by a sharp increase in crypto trading, the stock trading app said in its first public earnings report on Wednesday. I did.
However, shares fell after the company warned that a slowdown in business activity would hurt profits this quarter. Investors may also wonder if volatility crypto can continue to provide such a tailwind. Robinhood Finally, it has fallen by more than 8%.
Revenue has jumped more than 131% from $ 244 million a year ago, close to the company’s forecast of $ 546 million to $ 574 million.
Crypto trading revenue totaled $ 233 million, more than half of the revenue based on second quarter transactions of $ 451 million. The revenue share of cryptocurrency rose from 17% in the first quarter to over 51%.
Over 60% of cumulative net fund accounts have traded cryptocurrencies this quarter. In Q2 2020, crypto-based revenue was only $ 5 million.
Option trading clients contributed $ 165 million to transaction-based earnings in the prior quarter, with shares of $ 52 million. Robin Hood also earns money through its Gold subscription service.
Assets under custody increased 205% to $ 102 billion in the second quarter of 2021, from $ 33 billion in the second quarter of last year.
Robinhood investors have been warned that third quarter performance could be affected by a record slowdown in trading since the second quarter.
“For the three months ending September 30, 2021, seasonal headwinds and reduced business activity in the industry are expected to reduce revenues and significantly reduce new funding accounts from the previous quarter.” The company said in its earnings announcement.
Robinhood shares jumped 6.7% to $ 49.80 on Wednesday.
Robin Hood reported a net loss of $ 502 million, or $ 2.16 per share. This is part of the company’s projected net loss of $ 487 million to $ 537 million. The brokerage firm made a profit in the same quarter of last year. Costs associated with changes in the fair value of convertible bonds and warrants related liabilities in the second quarter of 2021 totaled $ 528 million.
As forecast by Robin Hood, the total number of financing accounts (accounts associated with bank accounts) in the second quarter was 22.5 million. This is an increase of 18 million in the first quarter, an increase of 151% compared to the same period last year.
The crypto trading that Robin Hood first introduced in 2018 has exploded in recent years. Robin Hood offers seven different digital coins, including Bitcoin, Ethereum, and Litecoin. Dogecoin, tokens inspired by the memes, occupied 34% of revenue based on cryptocurrency transactions for the first quarter.
Robin Hood specifically called on Dogecoin to generate profits on cryptocurrencies and warned of a slowdown in digital asset trading activity.
“If the demand for trading on Dogecoin declines and does not replace the new demand for other cryptocurrencies available for trading on the platform, our business, financial condition and performance could be affected.” Robin Hood said in 10Q, which was announced after Bell.
Robin Hood makes money in cryptocurrencies by routing orders to market makers that the company offers “competitive prices” and takes a percentage of the order amount. Bitcoin prices were around $ 45,000 on Wednesday, up more than 50% year over year.
Robinhood Posted on Nasdaq Last month it hit the public market trying to democratize itself for amateur investors. Since its inception, Robin Hood’s stock has had a wild ride. After sinking in the first few days of trading, the company had a moment of even action up 50% in the interest of retail investors.
Earlier this month, some Robin Hood shareholders were selling up to 97.9 million shares over the time I dented the inventory. Robin Hood said the SEC informed the brokerage firm on Aug. 13 that it was reviewing the S-1 resale and would not be able to sell it until SEC staff completed the examination and declared it valid. paddy field.