Robin Hood (HOOD) – Get the Class A report from Robinhood Markets, Inc. tries to reinvent itself.
Brokerage is bearing the full brunt of the slowdown in retail trade. In less than a year, Robinhood has gone from a trendy company to any platform. The company went public on Wall Street last July at a price of $38 per share with a market capitalization of nearly $32 billion.
These numbers now appear like a mirage after less than a year. Robinhood shares fell 69.6% to $11.55 when last checked on April 12. The company lost over $22 billion in market capitalization. But the hard part is that Robinhood’s mission to democratize commerce and finance seems in question.
While the company managed to disrupt the entire brokerage industry by cutting fees – ultimately forcing much larger competitors to follow suit – it has struggled to grow, particularly in recent months.
The stock trading app warned in January that it expects first-quarter revenue of less than $340 million, down 35% from 2021, after the number of monthly active users fell to 17.3 million in the fourth quarter of 2021 from 18.9 million in the third quarter.
One of the worrying signs is that revenue generated from cryptocurrency trading is steadily declining. RobinHood reported crypto trading revenue of $233 million in Q2 2021, but crypto-based revenue was only $48 million in Q4.
Robinhood has become hugely popular among retail investors buying and selling meme stocks and cryptocurrencies, following the hit of COVID-19, forcing governments to release trillions of dollars in cash relief for the unemployed and companies in difficulty.
But that money has dried up with the full reopening of many countries, ending fiscal and monetary stimulus. The Federal Reserve began raising interest rates last month and expects further hikes.
But Robinhood isn’t giving up. The brokerage is stepping up its efforts to bring back retail investors, especially Gen Z and Millennials who have made it successful.
The brokerage has just decided to integrate four cryptocurrencies into the assets to be traded on its platform. These cryptos are some of the most popular in the crypto space. For example, there is Solana, the native token of the Solana blockchain, which allows developers to build decentralized finance (DeFi) applications whose aim is to disrupt traditional finance.
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Robinhood also now offers Shiba Inu, one of the most popular meme coins along with Dogecoin. Shiba Inu has a market cap of $14.7 billion. The piece was named after the Japanese dog breed and was created in 2020 by an anonymous person or group known as “Ryoshi”.
By adding Shiba Inu to the list of assets available on its platform, Robinhood is betting that the legion of crypto fans and retail traders will flock to support their favorite token. A petition posted on change.org to force Robinhood to accept Shiba Inu had received over 559,715 signatures when last checked.
A Shiba Inu coin was worth $0.0000000003 in September 2020 but had dropped to $0.000002677 at last check, according to CoinGecko.
Meme Coins, Crypto Wallet
“We are excited to offer more choices to our customers as we work to make Robinhood the best place to invest in crypto,” said Steve Quirk, Brokerage Director at Robinhood. “As a security-focused company, we have a rigorous framework in place to help us evaluate assets for listing, and we remain committed to providing a safe and educational crypto platform.”
Shiba Inu (SHIB) and the other three cryptos – Solana (SOL), Polygon (MATIC), Compound (COMP) – are available to buy and sell now on the Robinhood app. Deposit and withdrawal will not be available immediately for these assets, but this capability will be available soon, the company said.
Apart from these new assets, Robinhood has also just attempted to woo retail investors behind the crypto price surge in 2021. The brokerage will be rolling out a crypto wallet to over 2 million customers. This wallet allows users to trade crypto outside of Robinhood.
This last point is important because while until now Robinhood allowed its users to buy and sell bitcoin and ethereum, customers could not spend their crypto on anything else unless they sold it. But now users can spend their crypto in the crypto space directly, by tipping on social media or paying for non-fungible tokens (NFTs) and more at no additional cost.
The wallet supports scanning QR codes to send crypto and includes mandatory two-factor authentication (2FA) to help protect customer crypto.
But the wallet is custodial, that is to say that Robinhood holds the codes that unlock this wallet. In other words, the user does not have full control over his wallet.
The trade-off, however, is that the user does not have to worry about having their funds blocked if their codes are lost or forgotten.