An individual a smartphone with the projected Robinhood value shares in Los Angeles, July 27, 2021.
Chris Delmas | AFP | Getty Photos
Robinhood’s brief run as a meme inventory has crashed into Wall Avenue actuality.
Shares of the stock-trading app dropped 8% on Thursday to $45.79 after the corporate reported earnings for the primary time since its IPO in late July. Since climbing as excessive as $85 on Aug. 4, the inventory has plummeted 46% to the bottom stage since its fourth day in the marketplace.
Robinhood mentioned second-quarter income greater than doubled to $565 million, near the excessive finish of its forecast. However an outsized quantity of its development got here from dogecoin, a cryptocurrency that was began as a joke.
Revenue from crypto transactions surged greater than 45-fold from a yr in the past to $233 million, accounting for 52% of complete transaction-related income, up from 17% within the first quarter and 4% within the fourth quarter of final yr. Greater than 60% of its funded accounts traded crypto within the quarter.
Inside Robinhood’s crypto enterprise, which incorporates shopping for and promoting of bitcoin, ethereum and a number of other different digital currencies, 62% of income got here from buying and selling in dogecoin. Meaning dogecoin, which greater than quadrupled in worth within the second quarter, accounted for nearly one-third of Robinhood’s complete transaction income.
Robinhood executives did not single out dogecoin on the earnings name on Thursday, however they shunned providing a income forecast as a result of there’s a lot uncertainty within the enterprise.
“We have skilled volatility from interval to interval that makes it troublesome to precisely predict leads to the brief time period,” Jason Warnick, Robinhood’s CFO, mentioned on the decision. “For Q3, we count on seasonal headwinds and decrease buying and selling exercise throughout the trade to end in decrease revenues and significantly fewer new funded accounts than we noticed in Q2.”
Robinhood’s personal inventory briefly noticed a few of the similar exercise that is made the app well-liked amongst younger retail traders. Like shares of GameStop and AMC early within the yr and dogecoin in April and Might, Robinhood shares soared for no basic purpose.
The rally did not final lengthy. Robinhood gained 24% on Aug. 3 and 50% the next day and was up as a lot as 82%.
On Aug. 4, 175.8 million shares traded arms, 72% greater than the quantity traded on the corporate’s IPO day. The inventory image HOOD was the highest ticker on the Reddit WallStreetBets tracker Swaggy Shares that day and was the highest traded inventory on Constancy.
Robinhood has given up all of its positive factors from these two days and is now simply 21% above its debut value on July 29.
“It would not resonate with me to name Robinhood a meme inventory,” Warnick mentioned.