The news: The trading app’s revenues fell sharply in Q3 2021 due to its oversized reliance on crypto trading, as we predicted earlier this year.
By the numbers: Transaction-based revenues overall reached $267 million, up from $202 million in Q3 2020. However, this is a significant decline from $451 million last quarter as global society inched toward a late-pandemic new normal, driving customers away from the app.
The big takeaway: Robinhood's drop in revenues is industry-wide foreshadowing. After global retail trading volumes fell 14% QoQ in Q3, we expect to see similar results from other publicly listed digital brokers like eToro and Coinbase.
Where does that leave Robinhood? Crypto trading volumes mostly depend on users’ bullishness on crypto prices at any given time, so they could perk back up. And the app shared plans in its Q3 filings about how it hopes to encourage more trading:
Finally, while Robinhood hasn’t announced which cryptos it will add next—it currently offers access to seven—adding the right coin at the right time could cause a big trading boost: Dogecoin represented 34% of its crypto transactions in Q2.
Dive deeper: Need more insights on how we expect digital brokers to adapt to falling trading volumes? Click here.