Fee-free buying and selling app Robinhood warned traders on Thursday that its fortunes could also be tied to a cryptocurrency that got its start as a joke.
In revealing its financials for the primary time whereas submitting to go public, Robinhood mentioned Dogecoin accounted for 34 % of its cryptocurrency transaction-based income within the first quarter, up from 4 % within the prior quarter. Any slowdown in demand, it mentioned, may adversely have an effect on its monetary outcomes.
“A considerable portion of the current progress in our web revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin,” the corporate disclosed underneath the danger warnings part of its S-1 filing with the Securities and Change Fee.
“If demand for transactions in Dogecoin declines and isn’t changed by new demand for different cryptocurrencies obtainable for buying and selling on our platform, our enterprise, monetary situation and outcomes of operations may very well be adversely affected,” it added.
Dogecoin reached a peak in early Might of about 73 cents per coin because it was cheered on by notable supporters including Tesla CEO Elon Musk. However it began off as a prank in 2013 by a tech marketer who melded two fashionable Web themes — cryptocurrency and a the Shiba Inu pup behind the so-called Doge meme — to make a Twitter joke.
“Investing in Dogecoin,” Jackson Palmer tweeted on the time, “fairly certain it’s the following huge factor.”
The meme foreign money, which was then made actual by software program engineer Billy Markus, has extra not too long ago fallen from its current highs to about 25 cents per coin, however remains to be up greater than 10,000 % from a yr in the past, in response to knowledge from Coinbase.
Robinhood on Thursday additionally famous that cryptocurrency transaction-based income made up 17 % of Robinhood’s whole income within the first quarter, or $87.6 million, in contrast with simply 3 %, or $4.2 million, a yr earlier.
The corporate launched its crypto buying and selling enterprise, often called RHC, in 2018 and at present lets customers commerce seven totally different cryptocurrencies: Bitcoin, Bitcoin Money, Bitcoin SV, Dogecoin, Ethereum, Ethereum Traditional and Litecoin.
“RHC’s enterprise could also be adversely affected, and progress in our web income earned from cryptocurrency transactions might gradual or decline, if the markets for Dogecoin deteriorate or if the worth of Dogecoin declines, together with on account of components corresponding to adverse perceptions of Dogecoin or the elevated availability of Dogecoin on different cryptocurrency buying and selling platforms,” Robinhood went on.
Whole crypto belongings held on Robinhood grew 23 instances over within the first quarter in contrast with the identical interval a yr in the past, Robinhood mentioned in its submitting. Over the identical interval, Robinhood’s whole income elevated 309 % within the interval to $522 million.
The explosive progress in Robinhood’s income from dogecoin and different cryptocurrencies earlier this yr coincided with a speedy run-up in worth all through the crypto market.