(Bloomberg) — Robinhood Markets Inc.’s cryptocurrency-trading revenue soared in the second quarter as customers plowed into digital assets like Bitcoin, highlighting the shifting preferences of individual investors emboldened by free trading.
The brokerage brought in $233 million in crypto-trading revenue in the period, up 4,560% from the $5 million it generated a year earlier, the Menlo Park, California-based company said in a statement Wednesday in its first earnings report as a public company.
The sharp increase reflects an ebullient era for virtual currencies. It also highlights how Robinhood is juggling multiple priorities as it grows. Around March 2020, its focus swerved from crypto offerings as the brokerage rushed to address service disruptions and customer complaints in stock and options trading amid a surge in volatility brought on by the Covid-19 pandemic.
“We’re happy to expand access through products like commission-free crypto trading, which saw strong growth this quarter among women investors in particular,” Chief Executive Officer Vlad Tenev said in the statement.
Cryptocurrencies accounted for about 41% of Robinhood’s $565 million of revenue in the three months ended June 30, which more than doubled from the same period a year earlier.
Pandemic Rout
Robinhood’s loss of $502 million, which was toward the low end of its earlier forecast, compares with a $58 million profit in last year’s second quarter, when retail investors plunged back into stocks after a pandemic-fueled rout.
The virtual-currency haul also reflects increased investor appetite for crypto this year across the industry. Bitcoin touched record highs in April, and hovered above $34,500 at the end of June. The price was closer to $9,000 around the same time last year.
Robinhood’s funded accounts reached 22.5 million customers as of June 30, compared with about 9.8 million a year earlier, according to the statement.
In a filing preceding its July 29 initial public offering, Robinhood forecast that it would post a loss of $487 million to $537 million on revenue of $546 million to $574 million. The loss it incurred in the period reflects liabilities it took on in raising emergency funds from investors earlier this year at the height of the mania over meme stocks such as GameStop Corp.
Shares of Robinhood fell 2.9% to $48.35 in extended trading at 4:09 p.m. in New York.
The stock has swung wildly since the IPO, dropping 8.4% on the first day of trading before storming back with a 57% gain the following week. The volatility displayed characteristics associated with the meme-stock frenzy that gripped markets early in the year, driven in part by Robinhood’s own clients, many of them novice traders.
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