(Bloomberg) — Robinhood Markets Inc. warned investors Wednesday that a second-quarter revenue surge, fueled by a boom in cryptocurrency trading, might not last.
In its first earnings report as a publicly traded company, the brokerage said revenue more than doubled to $565 million, but that a significant portion of that was fueled by virtual currencies, primarily Dogecoin, a token that originated as a joke.
Shares of Menlo Park, California-based Robinhood fell 5.5% to $47.06 in extended trading at 4:56 p.m. in New York, after climbing 31% since its July 29 initial public offering.
“We expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts” in the third quarter, Robinhood said in a statement.
Crypto revenue totaled $233 million in the second quarter, up 4,560% from a year earlier, underscoring how the ever-shifting preferences of retail traders play a crucial role in how much revenue the firm generates. That figure exceeded revenue from stock and options trading combined. Dogecoin accounted for 62% of crypto revenue in the period.
Pandemic Rout
Robinhood’s loss of $502 million, which was toward the low end of an 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.
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