Robinhood Shares Fall as Crypto Revenue Drops 47%

Robinhood shares fell sharply after the company’s first-quarter earnings showed a massive decline in crypto-related revenue.

The company reported $1.07 billion in revenue, which was in itself below Wall Street expectations, but the true shock came from the fact that its crypto revenue dropped to $134 million, representing a massive 47% drop year over year.

Robinhood’s shares fell by around 13% after the report, once again highlighting just how tied to the crypto market the company really is. 

In recent years, Robinhood has tried its best to move past the image it has as a retail trading app that is heavily dependent on options activity, crypto cycles and meme stocks, as the company expanded into more traditional financial sectors, like banking, credit cards and advisory services.

The reality, however, is that Robinhood is at best still in transition when it comes to that long-term strategy. At worst, it might never manage to escape the volatile nature of a business built on speculative market activity. 

This is one of the main reasons why the company’s stock has closely followed the price of Bitcoin, especially once it started dropping, as you can see in our graph below.

During the last quarter, crypto trading volumes remained low, as Bitcoin continued to face pressure, leading to reduced retail trading activity across the entire sector.

Robinhood did see its transaction-based revenue grow by 7% to $623 million, but this as well was below analyst estimates. Net interest revenue missed expectations, coming in at $359 million.

For now, the main question is whether Robinhood can keep growing outside of crypto fast enough to offset the volatility of its trading business. 

Until it does, every major slowdown in digital assets could continue to create pressure on its revenue, earnings, and share price.