The millennial-focused Robinhood trading company has posted its third-quarter revenue report on Oct. 26, and things are not looking pretty on the crypto front.
The firm stated that digital asset activity declined from record highs in the previous quarter, leading to considerably fewer new funded accounts. This has resulted in lower revenue in the third quarter of 2021 compared to the second quarter.
Robinhood reported $51 million in crypto transaction-based revenue for the quarter. This is up a whopping 860% compared to the $5 million in Q3 of 2020, but down 78.1% compared to the $233 million in crypto revenue in Q2, 2021.
Interestingly, the company did predict a decline in trading activity for Q3. It is likely to see an uptick in crypto revenue for Q4 as markets have recovered.
The company’s total net revenue for the period is $365 million, with crypto accounting for 14%. This is down 35% from the $565 million reported for the second quarter, where digital asset transactions made up 41% of the total net revenue for the firm.
Wall Street analysts expected Robinhood to drop six cents a share on revenue of $437 million, though the actual figure came in well below their estimations. The company actually lost closer to $2 per share on the disappointing results and reported a net loss of $1.32 billion.
Transaction-based total revenue was $267 million, down 41% from the $451 million in the previous quarter. Vlad Tenev, CEO and co-founder of Robinhood Markets, stated:
“This quarter was about developing more products and services for our customers, including crypto wallets. More than one million people have joined our crypto wallets waitlist to date.”
He added that looking ahead, the company is committed to delivering “tax-advantaged retirement accounts to help everyone invest for the long term.”
Robinhood stock has taken a predictable hit on the news as the disappointing revenue report has rattled shareholders. HOOD prices slumped 10.5% in after-hours trading, according to MarketWatch.
The stock reached $40 in anticipation of the report but slumped to $35.8 after-hours when the results were revealed.
Robinhood stock has declined 11.4% over the past 30 days and is down 44% from its early August all-time high of $70.40.