Dogecoin trading volume skyrocketing earlier this year was cited by Robinhood app as one of the primary reasons for its revenue growth.
Dogecoin price reached an all-time high of $0.68 (roughly Rs. 50) on May 6.
Robinhood, the online brokerage firm that rode the cryptocurrency bull-run earlier this year, said it expects its quarterly revenue to dip. In a filing at the United States Securities and Exchange Commission (SEC) on Monday, the company reported that its trading activity for the first two months of this year, when major cryptocurrencies like Bitcoin and Dogecoin had a dream run, was “particularly high”, but it dropped by the end of the second quarter of 2021. It said it expected the trading activity to drop further.
Nearly 17 percent of its total revenue in the first quarter of this year was from crypto transactions, compared with 4 percent in the previous quarter, according to the filings. In addition, 34 percent of this quarterly revenue was directly because of a spike in Dogecoin price and trading volume. Dogecoin, which has been backed by billionaire entrepreneur Elon Musk on social media, gained a massive price surge to reach an all-time high of $0.68 (roughly Rs. 50) on May 6 before losing most of it in a cryptocurrency market crash. Robinhood said its business could be hit if the markets for the cryptocurrency “deteriorate or if the price of Dogecoin declines” without a similar demand for other tokens on the app.
The firm reported year-on-year revenue growth of more than 123 percent, from $244 million (roughly Rs. 18,236 crores) at the end of the second quarter of 2020 to an expected $546-$574 million (roughly Rs. 40,803 crores-Rs. 42,896 crores) on June 30. The growth was driven in part due to “increased trading activity related to options and cryptocurrencies” the company said in an amendment to its Form S-1 filed with the SEC.
The filing comes as the trading app is preparing to go public on Nasdaq. It initially said it planned to raise $100 million (roughly Rs. 7,473 crore) on debut, but the latest filing suggests a more conservative offering.
Robinhood is also facing scrutiny from US regulators. Last month, it was penalised with a $70 million (roughly Rs. 5,230 crore) fine for causing harm to thousands of users.
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