Robinhood is moving forward with its IPO ambitions despite a $70 million penalties for misleading investors.
The corporation acknowledged in its S-1 filings that its revenue was linked to the popularity of DOGE.
Since the COVID-19 pandemic, Robinhood has grown at an incredible rate. With so many people confined at home, services like Robinhood, one of the major platforms enabling commission-free trades of stocks, cryptocurrencies, and exchange-traded funds via a mobile app, have seen their popularity surge. Robinhood has filed for an IPO as a result of its rapid development. However, according to the company’s financial records released earlier this week, Dogecoin is responsible for a significant portion of its success. As a result, the firm has warned that if the meme coin’s popularity declines, it will negatively impact its income.
DOGE was one of the most popular cryptocurrencies in the first quarter, thanks to encouraging comments from Elon Musk in public appearances and on social media. The token hit a high of $0.73 in May. Dogecoin accounted for 34% of Robinhood’s cryptocurrency transaction-based revenue during this time, according to financial records. This represents a 30% increase over the prior quarter.
A significant amount of the recent revenue rise was due to Dogecoin transactions, according to the S-1 filing with the Securities and Exchange Commission. Furthermore, if demand for Dogecoin transactions drops and is not replaced by fresh demand for other cryptocurrencies accessible for trade on our platform, our business, financial condition, and operating results may suffer.
DOGE has lost more than 70% of its value from its high in recent months. Furthermore, Elon Musk’s price influence has waned in recent weeks.
DOGE investors bet big on Elon Musk’s participation on Saturday Night Live today.
In sum, cryptocurrency transactions accounted for up to 17 percent of Robinhood’s total income in the first quarter, or $87.6 million, up from $4.2 million the year before.
For deceiving clients, Robinhood was fined $70 million.
Despite its popularity among ordinary investors, the site has been chastised for various questionable business practices. The platform is well-known in the crypto realm for pausing operations owing to technical issues during price swings. Users have previously been unable to sell or buy at critical levels as a result of this. Despite the company’s repeated promises to enhance the platform in order to handle the increased volume, little appeared to change.
The Financial Industry Regulatory Authority (FINRA) in the United States fined the corporation $70 million earlier this week for causing “widespread and serious harm” to clients by providing inaccurate information. The corporation has been penalised for the second year in a succession, after the Securities and Exchange Commission fined it $65 million last year for misleading stock market clients.
Such large fines and run-ins with authorities are expected to have a negative impact on the company’s stock price if it goes public.
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