“Robinhood’s ascent inside crypto is nothing short of remarkable,” Wolfe Research’s Steven Cubak warned in an investment note this week, “but the outsized contribution from Dogecoin simply cannot be ignored.”
According to Robinhood’s Q2 figures, crypto trading accounted for 41% of the company’s income, and more than 60% of the app’s funded accounts traded crypto throughout the quarter.
Some financial analysts are concerned about Robinhood’s recent announcement of the significant boost that crypto has provided to its second-quarter financial profitability, owing to the “outsized” influence that Dogecoin (DOGE) trading has played.
For the second quarter of 2021, the company earned $233 million from crypto trading services, up from $5 million for the entire year of 2020.
During the meme currency’s massive social media-fueled pump in Q2 2021, Dogecoin trades accounted for 62 percent of Robinhood’s crypto earnings, accounting for nearly a third of the company’s entire transaction revenue.
Chubak chronicled this exponential growth in Dogecoin’s contributions to the company’s revenue in his message to investors, from 6% in Q1 2021 to 26% in Q2.
He also stated that Dogecoin trading volumes decreased by 78 percent in Q3 and are already tracking below Q1 levels. He issued a warning:
“We believe the 3Q slowdown could be much more acute than many investors were anticipating […] This may not phase fintech investors with a longer investment horizon but may give financial investors more conviction in the short thesis.”
Following an apparently dismal IPO on Nasdaq this summer, Robinhood’s stock quickly became so volatile that the stock market was forced to halt trading many times.
In January, Robinhood did the same on its platform, causing controversy when Dogecoin (DOGE) soared by 900 percent.
Robinhood’s stock is currently down slightly over 5% on the day as of this writing.
