Robinhood stock suffered a lackluster performance Thursday, falling dramatically on a market debut that indicated flat investor demand. At the end of the New York session, $ HOOD closed 8.4% lower after falling as much as 12%.
The popular royalty-free trading app gained notoriety earlier this year. Young and “unprofessional” traders turned to it in record numbers during the meme stock frenzy as many countries were deeply in lockdown.
Investor snub Robinhood
Robinhood filed its Form-S1 in early July and first released its financial data.
The numbers show that total revenue for the year ended December 2020 was $ 959 million. This is an impressive 245% increase over the previous year to $ 278 million. Net income was $ 7 million versus a loss of $ 107 million for the year ended December 2019.
The monthly active users data also showed strong performance. In the first quarter of 2021 it was 17.7 million compared to 8.6 million in the first quarter of 2020.
However, the company admitted it was overexposed to Dogecoin at the time, saying that 34% of its cryptocurrency transaction revenue (for its “crypto” business) comes from the meme token. They warned that if DOGE demand falls and is not replaced by an alternative, they could be “adversely affected”.
“If the 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 and earnings position could be adversely affected.”
Dogecoin to the rescue?
Unfortunately, Dogecoin has underperformed since the local top in May. Since then, the controversial meme token has fallen 74%, and a failure to break the 50-day moving average suggests that shoppers have turned their attention elsewhere. For now, at least.
DOGEUSDT on TradingView.com
With a number of prominent crypto figures continuing to sound the alarm at Dogecoin due to its poor fundamentals, one wonders if memes alone can recapture the earlier form of DOGE.
Ripple chairman Chris Larsen doesn’t think that’s possible. He recently compared investing in DOGE to gambling.
The aforementioned company is looking for a Dogecoin alternative. So far, nothing has come out that comes close to the effects of DOGE at the beginning of this year. Its closest rival, Shiba Inu, is also trading flat.
While they previously talked about being “adversely affected,” it’s also important to note that cryptocurrency only accounts for 17% of their sales.
The bigger question is whether they can withstand the regulatory scrutiny ahead. Robinhood has caused quite a stir with the way it handled the GameStop / AMC saga, as well as the problem of “gamification” of the trade.
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