Robinhood says Dogecoin accounted for 62% of crypto gross sales within the second quarter
Commemorative Dogecoins to be issued in Yichang, China on May 14, 2021.
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Robinhood said crypto accounted for more than half of all transaction-based sales in the second quarter, and 62% of crypto revenue came from Dogecoin, a meme-inspired digital coin that originally started out as a joke.
In its first earnings report since going public last month, Robinhood said revenue from crypto transactions was $ 233 million, up from $ 5 million in the year-ago quarter. Crypto accounted for 52% of transaction-based revenue, up from 17% in the first quarter and 4% in the fourth quarter of last year.
The company also found that more than 60% of its accumulated net-funded accounts were trading in crypto during the quarter.
“The three months ending June 30, 2021 are the first quarter in which a larger proportion of new customers placed their first trade in crypto instead of stocks,” Robinhood said on the income statement.
While Robinhood gained popularity by allowing a new generation of investors to freely trade stocks, the company also benefited greatly from the surge in cryptocurrency markets. The app enables investors to buy and sell seven digital currencies, including Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, and Litecoin.
Cryptocurrencies had a particularly volatile second quarter. Bitcoin’s price has fallen more than 40% after a huge rally in 2020, although it has since regained much of that value. Ethereum, meanwhile, rose about 18% and the value of Dogecoin has more than quadrupled.
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Robinhood said in its IPO prospectus that Dogecoin accounted for 34% of its cryptocurrency transaction-based revenue in the first quarter, up from 4% in the fourth quarter. Much of that surge coincided with a spate of tweets about Dogecoin from Tesla CEO Elon Musk.
That number has increased significantly recently as the value of Dogecoin continued to rise.
Robinhood even included a specific risk in relation to Dogecoin in its prospectus and quarterly report, indicating that its business could be adversely affected “if Dogecoin markets worsen or the price of Dogecoin falls”.
Robinhood makes money on crypto by routing orders to market makers that the company says offer “competitive prices” and takes a percentage of the order value. Overall, the crypto assets on the platform almost doubled in the second quarter from $ 11.6 billion in the previous quarter and $ 3.5 billion at the end of 2020 to $ 22.7 billion.
PayPal, Coinbase, which went public earlier this year, and Square’s Cash app are other popular services used by U.S. consumers to buy and sell cryptocurrencies.
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