Robinhood revenues double, but company warns of slowdown in trading

Doubling revenues

Shares in Robinhood fell 12% as a forecast slowdown in trading in the current quarter outweighed news that the company doubled its earnings in Q2.

Online trading company Robinhood (HOOD) reported its first quarterly results as a public company on Wednesday after the close of trading.

Shares in Robinhood, which began trading on the Nasdaq on 29 July, were up 42.7% from the first day of trading, but were down 29% from the high of 4 August.

The company's shares were down 11.85% in after-hours trading on Wednesday.

The company reported a second-quarter 2021 loss of $502mln, or $2.16 per share. This is in line with Robinhood's projected loss range of $487mln to $537mln. However, in the same quarter last year, the brokerage posted a profit of $58mln or $0.09 per share.

Robinhood's total quarterly revenue rose 131% from a year ago to $565mln. Most of Robinhood's revenue, namely $451mln, came from payments for directing deal flow from investors to market makers such as Citadel.

Cryptocurrency trading on the platform brought Robinhood about half, namely $233m in revenue, up from $5m a year ago.

The company said on 18 August that Dogecoin, which was originally created to mock "crypto hype", accounted for 62% of cryptocurrency trading volume.

Meanwhile, equity trading revenue fell 26% to $52m, down from $7mln in the same quarter a year ago. As a result, the share of income from equity trading fell from 38% to 12%.

Options trading brought Robinhood $165m, down from $111mln a year ago.

The company reported an increase in the number of monthly active users on its platform to 21.3mln, with a total of 22.5mln accounts on the platform. However, Robinhood's average revenue per user fell to $112 from $137 in the previous quarter.

Assets on the Robinhood platform rose 205% to $102bn, up from $33bn in the second quarter last year.

The company also expects the "decline in trading activity in the industry" to have an impact on falling revenues, as well as a decline in the number of absolute net accounts in the trading app in Q3. Trading volumes on major cryptocurrency exchanges fell by more than 40% in June as cryptocurrency prices fell.