Robinhood Markets Inc.
more than doubled in the second quarter thanks to a stream of customers trading in cryptocurrency, but the company had a large loss due to an emergency financing agreement earlier this year.
The trading app recorded a loss of $ 502 million or $ 2.16 per share. Share at a turnover of $ 565 million in its first earnings report since its first public tender in July. In the second quarter of 2020, Robinhood generated a profit of $ 58 million on revenue of $ 244 million.
Nearly 14.2 million Robinhood users, or approximately 63% of the company’s customer base with funded accounts, traded digital assets in the second quarter. Robinhood earned $ 233 million in fees from directing clients’ cryptocurrency trading to high-speed trading companies, with dogecoin accounting for nearly two-thirds of the volume. That’s up from just $ 5 million a year earlier.
It helped offset the slowdown in other parts of Robinhood’s business, partly due to declining interest in memo shares. For example, fees that Robinhood earned to carry out clients’ stock trading fell by 27% to $ 52 million.
Despite declining stock trading activity, interest rates received by Robinhood on margin loans nearly tripled to $ 31 million. About 700,000 users had about 5.4 billion. Dollars in balance loans at the end of June.
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More than 300,000 Robinhood users bought shares in the company’s IPO via its own app. It was the seventh new listing that Robinhood let its users buy for the IPO.
CEO Vlad Tenev said in an earnings conference call that these offers were oversubscribed by a factor of five. For the two IPOs that Robinhood offered on its app during the second quarter, medical scrubber
and identity business
Clear safe Inc.,
users had about 80% of the shares they received 30 days after.
“Customers who have participated in these listings have been relatively diamond-handed, so to speak,” Tenev said, referring to a popular term on trading bulletin boards to describe investors holding long-term stocks.
Robinhood reiterated its third-quarter outlook for lower revenue and fewer new accounts, citing a typical trading break in late summer and early fall.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com
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Appears in the print edition of August 19, 2021 as ‘Trades in Crypto Boost Robinhood Revenue’.
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