Robinhood recently revealed that it had gained most of its revenue from Dogecoin. This was out after the exchange filed a form S-1 for going ahead with its IPO. The document also said that Robinhood is so closely tied to Dogecoin that a decrease in the demand of that latter could lead to the demise of the business. Robinhood has chosen the ticker name HOOD to go ahead with the IPO.
What do we know?
The S-1 filing showed that Robinhood is heavily reliant on Dogecoin. It also said that if dogecoin’s demand decreases and is not replaced by the demand of some other coin on their platform, their business will be adversely affected. Of the total revenue of Robinhood, 17% came from crypto trading on their platform. And among this, 1/3rd of the revenue came from Dogecoin trading. This makes it more important to Robinhood than to retail investors.
Robinhood’s reply to Warren Buffet
A month or two back, Warren Buffet insulted this new generation of investors. To this, Robinhood replied that everyone is tired of Warren Buffets and Charlie Mungers, who act like they are the only ones who know investing. Robinhood encourages everyone to take control and invest any sum of money they want. Their goal is to make investing simple and more accessible to the common people. So, this thought process of the company and their focus on meme stocks and coins got them a lot of users.
With the increasing popularity of Dogecoin after the price hit new paradigms, Robinhood saw substantial growth in its revenue. Just in Q1 2021, the company recorded over $522 million in revenue. And this was after they went through quite a lot of controversy over the trading of GME when hedge funds were draining out.
Is Robinhood stock going to be a good investment?
I would say if you want to invest in a crypto company, then Coinbase seems to be a much better choice. They don’t get into any controversy or any shady stuff, and they are also the biggest exchange in the US. Coinbase also doesn’t have any dependency on a particular crypto, making its revenues much more stable and safe.
Does the fact that Robinhood has gained most of its revenue from Dogecoin make it a really risky business? And after the IPO, will you buy its shares? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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