Analysts warn of ‘acute’ slowdown in Robinhood’s third quarter and DOGE dependency

Robinhood’s recent announcement of the big boost cryptocurrencies had to their second quarter financial earnings is worrying some financial analysts, in large part due to the “outstanding” role the Dogecoin (DOGE) trading played.

In a note to investors this week, Steven Chubak of Wolfe Research warned that “Robinhood’s growth within the cryptomarket is nothing short of remarkable, but Dogecoin’s outsized contribution simply cannot be ignored.”

As previously reported, Robinhood’s second quarter results revealed that cryptocurrencies grew to represent 41% of its revenue and that more than 60% of the app’s accounts traded cryptocurrencies in the quarter. The company generated $233 million in cryptoactive services for the second quarter of 2021, up from $5 million for the full year of 2020.

A staggering 62% of Robinhood’s cryptoactive revenue in the second quarter of 2021 was derived from Dogecoin trading during the meme currency pump via social media – representing about a third of Robinhood’s total transaction revenue.

In his note to investors, Chubak traced this exponential growth in Dogecoin’s contributions to the company’s revenue, from 6% in Q1 2021 to the 26% mark in Q2. He added that Dogecoin’s trading volumes fell around 78% in the third quarter and are now below levels in the first. He warned:

“We believe the 3Q slowdown could be much sharper than many investors expected […] This may not take fintech investors to a longer investment horizon, but it may give financial investors more conviction in the short term.”

Having launched its initial public offering this summer in an initially disappointing debut on Nasdaq, Robinhood’s shares quickly became so volatile that the stock exchange was forced to stop trading several times. Robinhood itself did the same for its app in January, causing popular outrage when the DOGE rose 900%.

At the time of this writing, Robinhood shares were down just over 5% for the day.

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