Robinhood posts half a billion loss in second quarter, but investments double

Robinhood reported a large loss in its first earnings report since its volatile IPO last month, overshadowing the fact that sales more than doubled in the second quarter, driven by strong demand for cryptocurrency trading.

The company reported $565 million in revenue for the quarter. Analysts predicted $521.8 million in sales. According to Robinhood, this was the first time that more new customers made their first trade in cryptos such as bitcoin and ethereum rather than stocks.

On a conference call, executives stated that dogecoin accounted for more than 60% of cryptocurrency trading volume in the second quarter, thanks to tweets by Tesla and SpaceX CEO Elon Musk.

Robinhood also stated that its monthly active user base more than doubled to 21.3 million in the second quarter of 2021, up from 10.2 million the previous year.

The trading platform, on the other hand, posted a net loss of $502 million, or $2.16 per share. That was significantly higher than Wall Street had predicted. According to the corporation, a significant portion of the loss was due to a change in fair value for convertible notes and warrant liabilities.

The business cautioned that the third quarter, which is traditionally a poorer period for equities, will result in “reduced trading activity throughout the industry,” as well as “lower revenues and significantly fewer new funded accounts than in the prior quarter” for Robinhood.

Robinhood’s shares plunged over 8% after hours, after rising nearly 7% during in-session trading Wednesday ahead of the earnings report.

It’s already been a crazy trip for Robinhood investors.

The stock tripped out of the gate, tumbling more than 8% in its debut as investors questioned its valuation and chastised the firm for briefly prohibiting consumers from purchasing GameStop and other meme stocks advocated by Reddit users earlier this year.

Robinhood has also been criticised of “gamifying” investment and pandering to younger, less experienced traders.

Robinhood was sued by the family of a 20-year-old user who committed suicide after believing he owed $730,000 on the app. Robinhood has since stated in a regulatory filing that the issue has been settled.

Robinhood is seeking to make peace with traders who have been let down by recent occurrences.