Robinhood posted a loss on its crypto revenue in Q4 of 2021, further exacerbating losses occasioned in the third quarter.
According to a Thursday earnings report, the trading firm posted $48 million crypto income in Q4 of 2021, which is a 6% decline from the previous quarter, and a step further from a projected revenue of about $55 million from the previous period.
In reaction to the report, Robinhood shares (HOOD) fell by about 14% as Wallstreet investors absorbed the shock of lower than expected earnings. Although the firm is still up some 300% compared to 2020, its failure to list more cryptocurrencies appears to be one of its biggest missteps yet.
2021 is no doubt a year to reckon for the momentous gains made from the meme-coins explosion. Coins such as Shiba Inu, Dogecoin, Floki Inu among others made well over 10x returns in 2021 sparking a sudden interest in the firm’s users who demanded a piece of the action. They requested the firm to list various meme coins, one of them being Shiba Inu.
Commenting on the revenue drop, Julie Chariell, an analyst at Bloomberg Intelligence said: The crypto numbers look “a little bit light compared to last quarter — so huge growth year-over-year, but down from last quarter, perhaps because they don’t have Shiba Inu, – “That’s the one coin that they’re missing, everyone’s waiting for. But the key part to that now is what happens in the first quarter and we know it’s looking ugly so far this year.”
SHIB, which is a spinoff of DOGE, particularly caught the attention of investors after rocketing by as much as 1000% in October 2021, leapfrogging Dogecoin as it became the eighth largest cryptocurrency with just over a $38 billion market cap.
This sparked incessant calls by investors for Robinhood to list SHIB with an online petition even being launched to collect 1,000,000 signatures. Robinhood has however remained on the sidelines citing regulatory concerns as the major reason for not listing SHIB.
“I wouldn’t say that we’ve been prevented from adding any coins,” said Vlad Tenev, Robinhood C.E.O during a Thursday earnings call. “We have been proactively engaging with the regulators. They are concerned that a lot of these platforms that are adding a lot of coins may be adding unregistered securities.”
It has to be recalled that while most crypto firms remain in the regulatory grey area on U.S. soil, Robinhood is a brokerage firm that offers both stock and crypto trading. It is thus regulated under conventional stock brokerage laws by the SEC, the more reason it has been reluctant on listing more coins.
“We are definitely being deliberate. We want to avoid triggering SEC registration requirements,” Tenev added.
The C.E.O however, said that the firm had the option of trying to list the coins in other jurisdictions including the U.K., and see how it works out before rolling them out in the U.S.
Despite this, the firm has been ramping up its crypto portfolio and products which has seen its crypto trading revenue surge to $233 million since debuting crypto services. Its zero-commission transactions have also helped it enlist new users pitting it against competitors such as Coinbase.