Why did Robinhood stock plunge 10%?
Robinhood has just taken another hit. Its shares dropped 10% on Thursday, 19th August, the lowest after its worst trading debut among companies with an IPO of the same size. The company started with 55 million shares debuting at $38.
Robinhood stock is on a rollercoaster
Despite promising figures, the firm warned investors on its second-quarter earnings call: “We expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts.”
Following the call, Robinhood shares dipped to $45.70 during extended trading. This comes after the Robinhood’s share value skyrocketed by 123% just following its IPO. Dogecoin currently makes up 62% of the firm’s $565 million revenue. A significant portion of that increase was brought on by other digital currencies too.
Nevertheless, the company plans to continue its crypto development. A crypto wallet is currently in the works, as well as potential in-app social media features, the ability to gift stocks, retirement accounts, and the expansion of crypto offerings available for trading.
“It’s something that our teams are working on. The ability to deposit and withdraw cryptocurrencies is tricky to do with scale, and we want to make sure it’s done correctly and properly,” said Robinhood CEO Vlad Tenev. He also mentioned the wallet demand was especially high among Dogecoin enthusiasts.
Robinhood representatives stay calm
Robinhood executives didn’t single out Dogecoin on the earnings call on Thursday, but they refrained from offering a revenue forecast because there’s so much uncertainty in the business.
“We’ve experienced volatility from period to period that makes it difficult to accurately predict results in the short term,” Jason Warnick, Robinhood’s CFO, said on the call. “For Q3, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than we saw in Q2.”
Shares of Robinhood Markets fell 10.3% after the online brokerage released its second-quarter financial results and alerted shareholders to a slowdown in trading activity.
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