Robinhood, the brokerage at the centre of a meme stock trading mania, said that its crypto trading business had fallen 78 per cent in the third quarter as it delivered a disappointing outlook for the year.
The brokerage said that the decline in crypto activity — a key revenue driver for the broker — led to “considerably fewer” new funded accounts, as well as a drop in total funded accounts on the platform.
Cryptocurrency revenues for the third quarter fell to $51m, significantly down from its second-quarter crypto-based revenue of $233m. Cryptocurrency trading accounted for the majority of the brokerage’s revenue during the second quarter.
The US-based broker, which went public this summer, said that it expected revenues of less than $1.8bn this year, missing analysts’ forecasts for $2.03bn. It also said that new funded accounts in the final three months of the year would not accelerate, expecting 660,000 in line with the third quarter.
Robinhood shares fell more than 9 per cent in after-hours trading.
The broker added crypto “wallets” to the platform earlier this month, a move that would put Robinhood in direct competition with more established digital currency venues such as Coinbase.
“This quarter was about developing more products and services for our customers, including crypto wallets,” said Vlad Tenev, chief executive and co-founder of Robinhood Markets. “We believe that Robinhood is becoming the most trusted and intuitive platform for retail and crypto investors.”
Cryptocurrency transaction revenues were still up more than 800 per cent from the same quarter the year before, as digital currencies have experienced record popularity and mainstream adoption in financial markets.
Robinhood has grown rapidly over the past year. The broker estimated that half of all new brokerage accounts opened from 2016 to 2021 were on its platform, and half of its own 22.4m funded accounts opened since 2015 were first-time investors.
