Robinhood stock fell by over 10% after the online stock-trading platform warned that the increase in trading saw its revenues double last quarter seems to be fading.
The Silicon Valley-based company reported second-quarter revenue of $565m, up from $244m in the same period last year, but Robinhood warned not to expect more of the same moving forward.
“For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter,” the company said in a statement.
Shares of Robinhood reached a peak of $85 shortly after trading commenced, as investors flocked to the stock. The stock quickly lost momentum however and is currently hovering just above the $45 level.
“With a market cap of over $35bn, Robinhood needs to show strong growth to keep the momentum going,” said Simon English of Sunborn Consulting. “With this in mind, it’s no surprise to see that the stock finds itself under pressure following the announcement that revenues will decline next quarter.”
One major factor influencing the projected downturn is the end of stimulus checks in response to the Covid crisis, which are believed to have driven much of the boom in retail trading. Meanwhile Robinhood themselves have acknowledged the concerns over more than half of their crypto revenue coming from trading in the notoriously volatile dogecoin.
“If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected.” the company said this week.