Robinhood says dogecoin accounted for 34% of crypto revenue in Q1

Robinhood, the company that helped popularize equity trading in recent years, saw such growth in dogecoin transactions this year that it included a specific risk in its cryptocurrency-linked IPO prospectus.

The company said in its IPO filing on Thursday that the meme-inspired token accounted for 34% of its revenue based on cryptocurrency transactions in the first quarter. That’s a 4% increase in the fourth quarter.

Much of that growth has coincided with a barrage of dogecoin tweets from Tesla CEO Elon Musk, who tweeted “Free the Doge!”

Revenue derived from Dogecoin accounted for 6% of the company’s overall revenue in the period, while cryptocurrencies accounted for 17%. The trading app offers seven different digital currencies, including bitcoin, ethereum, and litecoin.

Robinhood said his business could be affected “if the dogecoin markets deteriorate or if the price of dogecoin falls, even as a result of factors such as negative perceptions of dogecoin or the increased availability of dogecoin on other cryptocurrency trading platforms.”

Cryptocurrency trading, which Robinhood first introduced in 2018, has exploded in recent years. Robinhood makes money in cryptocurrencies by sending orders to market makers who the company says offer “competitive prices” and taking a percentage of the order value.

Overall, crypto assets on the platform soared in the first quarter year-over-year from $ 480.7 million to $ 11.6 billion. Total revenue increased 309% in the period to $ 522 million from $ 128 million a year earlier.

But scaling up has at times been problematic, according to the filing. For example, partial service outages and degraded service during times of high crypto trading volume were a problem in mid-April and early May.

Like PayPal, which does not allow its customers to transfer cryptocurrencies to other digital wallets, Robinhood does not allow users to deposit or withdraw cryptocurrencies in or out of the app, although it said it could add such a feature in the future.

While Robinhood does not name a rival in the filing, the company acknowledges that it operates in “highly competitive” markets alongside “discount brokerages, established fintech companies, venture-backed fintech firms, banks, exchanges. cryptocurrencies, asset management firms. and technological platforms “.

In addition to PayPal, Coinbase, which went public earlier this year, and Square’s Cash app are two popular services used by American consumers to buy and sell cryptocurrencies.

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