Robinhood, the trading platform popular with retail investors, has long touted its mission to "democratize finance". The company's main focus — and what it's been known for — is making it easy for retail investors to trade stocks, and some complicated financial derivatives, right from their phone. But, increasingly, that's not how Robinhood makes its money.
Stocks are...boring?
Robinhood did $451m in transaction-based revenue last quarter, more than half of which ($233m) was from users trading cryptocurrencies. Just $52m was from trading vanilla equities (stocks and shares), while $165m was from options trading, which are usually a much higher-risk instrument, that can be significantly more complicated to understand.
But the most worrying stat was that 62% of the cryptocurrency trading revenue was from the specific trading of Dogecoin, the cryptocurrency that was originally designed as a satirical joke on the speculative trading of other cryptocurrencies. Ironic.
Not so fast
So on the surface, Robinhood is growing really, really fast. In its most recent quarter, transaction-based revenue jumped 141% year-on-year. However, if you strip out cryptocurrency entirely, then Robinhood's transaction revenue grew at a much more sedentary 20% year-on-year. For good or bad, a bet on Robinhood is increasingly a bet on crypto.
