HomeECONOMYRobinhood warns it could hurt if interest in Dogecoin drops

Robinhood warns it could hurt if interest in Dogecoin drops

- Advertisement -

Commission-free trading app Robinhood warned investors on Thursday that its fortunes could be tied to a cryptocurrency that began as a joke.

In publicly disclosing its financial position for the first time during the filing, Robinhood said that Dogecoin accounted for 34% of its cryptocurrency transaction-based revenue in the first quarter, up from 4% in the previous quarter. It said any slowdown in demand could adversely affect its financial results.

“A large part of our recent increase in net revenue earned from cryptocurrency transactions is attributable to transactions in Dogecoin,” the company disclosed under its Risk Warning section. S-1 filing with the Securities and Exchange Commission.

“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 may be adversely affected. ”, it added.

Dogecoin peaked at around 73 cents per coin in early May as it was cheered by notable supporters, including Tesla CEO Elon Musk. But it began as a prank in 2013 by a tech marketer who merged two popular Internet themes — cryptocurrency and a Shiba Inu puppy behind the so-called Doge meme — to create a Twitter joke.

A picture of Elon Musk smiling
Dogecoin has gained followers thanks to the tweets of Elon Musk.
AFP via Getty Images

“Investing in Dogecoin,” Jackson Palmer tweeted at the time, “is definitely the next big thing.”

According to data from Coinbase, the meme currency, which was then made real by software engineer Billy Marcus, has recently fallen from its recent highs to around 25 cents per coin, but it is still higher than a year ago. more than 10,000 percent.

Robinhood also noted Thursday that cryptocurrency transaction-based revenue made up 17% of Robinhood’s total revenue, or $87.6 million, in the first quarter, compared to just 3%, or $4.2 million, a year ago.

The company rebranded its crypto trading business as RHC in 2018, and currently lets users trade seven different cryptocurrencies: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin.

“RHC’s business could be adversely affected, and growth in our net revenue earned from cryptocurrency transactions could slow or decline if the market for Dogecoin deteriorates or the price of Dogecoin declines, with negative sentiment towards Dogecoin This includes as a result of factors such as the increased availability of Dogecoin on other cryptocurrency trading platforms,” ​​Robinhood went on.

This Thursday, December 17, 2020 photo shows the Robinhood app logo on a smartphone in New York City.
Robinhood warns that it has a very high risk for Dogecoin.
AP

Robinhood said in its filing that the total crypto assets held on Robinhood grew 23x in the first quarter compared to the same period a year ago. Over the same period, Robinhood’s total revenue grew 309 percent to $522 million.

Robinhood’s explosive growth in revenue from Dogecoin and other cryptocurrencies earlier this year coincided with a rapid rise in price across the crypto market.

.

- Advertisement -
- Advertisement -
Must Read
- Advertisement -
Related News
- Advertisement -spot_img