Robinhood Shares Take Major Dive As Crypto Revenues Decline

Over the past five days, the stock prices have been on a sharp decline, and while it is showing some slight signs of recovery, there is still strong resistance preventing any significant uptrend.

Robinhood Accounts Dealt Major Blow

The decline in Robinhood shares has been attributed to an exodus of users from the platform, mainly because of the fizzling of the meme coin hype. The latest data shows that many users on the platform have left the application or have sold off their crypto holdings.

The decline in the holdings and number of users shows that new users joining the platform have not offset these losses. Robinhood enjoyed a massive influx of users in the previous quarters following increased demand for meme coins. However, the boom of meme coins has died down, which seems to affect Robinhood’s prices negatively.

The total number of funded accounts on the platform has declined from the previous 22.5 million accounts to 22.4 million accounts. This is far below what analysts had predicted, as they had estimated that the number of funded accounts on the exchange would grow to 24 million during the last quarter.

During the first two quarters of 2021, the number of funded accounts on the platform increased by around 10 million. This was a record increase for a brokerage firm that operates in the US.

As aforementioned, Robinhood growth this year was attributed to the rapid growth and adoption of meme coins. It also became a favorite among new users because it has a user-friendly interface that makes it easy for beginner traders to trade their cryptocurrencies.

The blow towards Robinhood’s stocks started during the second quarter of this year where the number of active monthly users declined from the previous highs of 21.3 million to 18.9 million.

During the first half of the year, meme coin trends were at their pick. Dogecoin was making major gains during the first half of 2021, but this hype seems to have cooled off. In this case, the number of users on the platform has reduced.

Falling Revenues

Following the decline in the number of accounts, Robinhood’s revenues have also declined significantly. The exchange’s crypto revenues declined to $51 million during the third quarter of 2021. This is a major dip compared to the $233 million in revenues reported during the second quarter. According to Robinhood, the low revenues had been attributed to the reduced crypto trading activity during the third quarter.

During the third quarter, the total trading revenues came in at $365 million, which is significantly lower than the $437.1 million that analysts had predicted. The adjusted net loss for each company share came in at 2.06, significantly higher than the previously estimated $0.67.

Despite the revenues and number of users dropping on the exchange, Robinhood has been working round the clock to bring in new products for its users. Among the initiatives that Robinhood has recently engaged in is the waiting list for its crypto wallet. The crypto wallet is now among the most requested products in the cryptocurrency space, with more than one million clients already signed for the waitlist.

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