This illustration photo shows the Robinhood logo on a phone screen. A representation of cryptocurrency is also seen in this illustration shot taken in Krakow (Poland) on June 29, 2021 Jakub Porzycki/NurPhoto via Getty Images
Robinhood fell 10% Thursday due to concerns that trading volumes could drop in the months ahead.
Due to new customers who invest heavily in crypto, the company's total net revenues increased by 131%
The company stated that "Many of these elements worked in our favor", referring to the crypto boom and the pandemic.
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Robinhood shares fell as high as 10% Thursday, after the popular trading platform stated in its earnings report that the boom in trading - largely driven by cryptocurrency - that drove its second quarter revenues could be fading in the future.
After a few losses in the early days, the stock was trading lower at 9:50 AM. It was trading at $46.16 (7.31%) ET.
According to the company, the slowdown will occur as the economy expands, which will cause people to spend less time at their homes.
The company's total net revenues increased 131% to $565million, compared to $244 million in 2020's second quarter.
New customers invested in digital assets such as bitcoin, dogecoin, and ethereum to boost the revenue.
The company stated that "many of these factors worked for us." Robinhood stated that it expected "seasonal headwinds" and lower trading activity in the industry for the next three-months to lead to lower revenues and significantly fewer funds than the previous quarter.
The quarter's cryptocurrency trading revenue increased by 4,560% to $233million in the second quarter compared with $5 million last year. 60% of crypto trading revenue was generated by dogecoin, a meme token that has reached dizzying heights this year.
Equities trading revenue decreased 26% to $52million in the second trimester, compared to $71 million in 2020's second quarter.
Analysts worry that Robinhood could face difficulties in retaining users due to COVID-19 restrictions being eased.
David Trainer, CEO at New Constructs, an investment firm, stated that Robinhood's "best days" are over. The popularity of stock trading among retail investors was boosted by the COVID-19 pandemic. This is because people had more time to trade during lockdowns last year. People are returning to their normal lives.
A net loss of $502million was reported by Menlo Park-based company, which is $2.16 per share. This was significantly higher than analyst estimates. The number of monthly active users rose 109% to 21.3million in the third quarter.
On July 29, the online trading app went public. It listed its IPO at $38 per shares and allocated nearly a third to retail investors.