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Robinhood is expecting its crypto revenue to decline significantly in the third quarter. The trading platform made the revelation in a filing with the US Securities and Exchange Commission(SEC) on Monday. Robinhood noted that its Q3 2021 revenue would be lower as a result of increased crypto trading in the first quarter, which was fuelled by Dogecoin to a large extent.
Robinhood Expects Decline in Crypto Trading Revenue
In a revision to its S-1 form filed with the SEC, Robinhood declared that it intends to raise over $2 billion for its upcoming initial public offering(IPO) and that it will price the shares in the $38-$42 range. The company said that it will reserve 35% of these shares for its customers.
Furthermore, the stock and crypto trading service reported that trading activity for digital currencies was “particularly high” in January and February, but it dropped by the end of the second quarter. Robinhood expects this trend of decline to continue in Q3, leading to lower revenues from crypto trading.
“We expect our revenue for the three months ending September 30, 2021, to be lower, as compared to the three months ended June 30, 2021,” the company stated.
Robinhood had previously revealed that 17% of its revenue in the first quarter came from crypto trading, out of which 34% was attributed to Dogecoin alone. This impelled the company to list decline in Dogecoin demand among its financial risks for the future.
According to the trading platform, its total revenue has nearly doubled since the last year, from $244 million at the end of Q2 in 2020 to $546 million and $574 million on June 30. Robinhood credits “increased trading activity related to options and cryptocurrencies” for this growth.
Robinhood’s IPO and Ongoing Scrutiny
On July 1, Robinhood disclosed the company’s financials for the first time before the SEC as part of its S-1 filing. The trading platform detailed that it was looking to raise $100 million for its IPO, which would trade on Nasdaq under the ticker “HOOD”. Additionally, the filing highlighted that Robinhood was holding $11.6 billion worth of crypto assets before the launch of its class A common stock. The latest amendment to this filing is noteworthy because the company has upped its funding for the IPO process considerably.
While Robinhood’s popularity continues to climb upwards, regulators have taken a stern approach to the company. Just last month, the Financial Industry Regulatory Authority asked the platform to pay $70 million in fines for misleading customers and system outages. Robinhood later said that it had reached an agreement with the agency and will pay some of the penalties under a “no admit, no deny basis.”