$30 million from clients trading dogecoin in the 1st quarter - and that amount likely skyrocketed ahead of the company's IPO
Trading in dogecoin helped generate $30 million in revenue for Robinhood in the first quarter.
Robinhood is likely to see revenue derived from dogecoin explode in the second quarter.
Trading volumes in dogecoin soared 258% in the second quarter
Robinhood's S-1 IPO filing released last week revealed that the company generated nearly $30 million in revenue from trading in dogecoin in the first quarter of 2021.
That revenue figure is likely to explode in the second quarter, as dogecoin spiked more than 1,375% amid a surge in popularity in part driven by tweets and a SNL appearance from Tesla CEO Elon Musk.
Robinhood's significant revenue derived from dogecoin trading is a reason the meme-inspired cryptocurrency was included as a risk factor in the online trading app's IPO filing.
"A substantial portion of the recent growth in our net revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin. If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected," Robinhood warned prospective investors.
But that risk likely won't be felt by investors in the second quarter of 2021, when cumulative daily trading volumes in dogecoin soared 258%, based on historical data.
The trading volume in dogecoin in the first quarter of 2021 was $243 billion. On average, $2.7 billion worth of dogecoin exchanged hands on any given day in the first quarter, and dogecoin was just $0.05 on March 31.
Fast forward to the second quarter, and the cumulative trading volume in dogecoin soared to $866 billion. On average, $9.5 billion worth of dogecoin exchanged hands on any given day in the second quarter, and dogecoin peaked at about $0.74 on May 8.
That could translate into Robinhood generating more than $100 million in revenue from dogecoin transactions next quarter. But a steep swing lower in dogecoin revenue is likely for Robinhood going forward, given that average daily trading volumes in dogecoin has fallen to $5.8 billion since its peak.
Following a 80% decline in dogecoin, combined with recent tweets from Elon Musk having little impact on its price, it seems unlikely dogecoin will ever generate as much revenue for Robinhood as it did over the past six months.
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