Robinhood shares tank 10% after crypto revenue falls by three quarters

Robinhood shares (HOOD) have fallen sharply on the back of the firm’s Q3 results which posted lower than expected crypto trading revenue.

The popular retail trading firm published its Q3 report on Oct. 26, with crypto accounting for $51 million (19%) of the total $267 million worth of transaction-based revenue in the quarter.

The release of the report on Tuesday coincided with HOOD dropping around 10% to $35.70, however the price has since gained 1.9% to sit at $36.40 at the time of this writing.

The $51 million generated from crypto transactions in Q3 marked a 78% decrease compared to the firm’s record $233 million from Q2. Robinhood’s crypto revenue last quarter was bolstered by the Dogecoin (DOGE) community, with the memecoin representing a whopping 62% of crypto revenue.

The firm posted total net revenues of $365 million for the quarter, which fell well below Wall Street analysts predictions of $437.1 million according to FactSet.

BREAKING: #Robinhood shares plunge over 8% in aftermarket trading as Q4 revenue came in at $365 million, missing estimates of $431.5 million. $HOOD pic.twitter.com/Krl5TaOiuM

— Mr. Whale (@CryptoWhale) October 26, 2021

Robinhood stated in its Q3 report that its business had been impacted by several factors including seasonality, market volatility, retail trading behavior and unanticipated market events. The firm said that the same issues may persist in Q4.

“In the absence of any changes to the market environment or exogenous events, we believe this may result in quarterly revenues no greater than $325 million and full-year revenue of less than $1.8 billion,” the report read.

While crypto activity declined, Vlad Tenev, the CEO of Robinhood outlined his optimism for the firm’s long term prospects in digital assets, as he emphasized the new products and services built for retail traders in Q3, such as a digital wallet that will finally enable users to withdraw and deposit crypto to and from the platform:

"More than one million people have joined our crypto wallets waitlist to date. With 24/7 live phone support, we believe that Robinhood is becoming the most trusted and intuitive platform for retail and crypto investors.”

“And looking ahead, we're committed to delivering tax-advantaged retirement accounts to help everyone invest for the long term,” he added.

Related: Robinhood crypto wallet waitlist hits 1 million people

In broader terms than crypto in Robinhood’s Q3 report, the firm's total net revenues of $365 million marked a 35% decrease from the previous quarter. While the firm posted a net loss of $1.32 billion, or $2.06 per diluted share compared to a $502 million loss, or $2.16 per share, in Q2.

Monthly active users also dropped from 21.3 million in Q2 to 18.9 million last quarter. However, Robinhood’s user base could be set to increase in Q4, with speculation swirling around the Shiba Inu (SHIB) community that the dog themed token may be listed on the platform soon.

There is no evidence confirming this however. Robinhood did send out a survey on Oct. 23 to its customers regarding the crypto assets they purchased over the past three months, with SHIB making the list.

BREAKING NEWS: Robinhood is emailing this survey to select users of their platform. They are including #SHIB as one of the answers to select! Clearly doing market research on what their consumers want. pic.twitter.com/ovBNV2p0Wl

— Shiba Inu News (@ShibalnuNews) October 22, 2021

According to data from CoinGecko, the price of SHIB has gained around 69% over the past seven days to sit at $0.00004759 at the time of writing, while the asset is up a mammoth 568% over the last 30 days.