Robinhood slips 10% after warning that a crypto-driven revenue bump could soon fade

• Robinhood slipped 10% on Thursday on concerns that a surge in trading could dwindle in the months ahead.
• The company posted total net revenues that increased 131% driven by new customers investing heavily in crypto.
• "Many of these factors worked in our favor," the company said, referring to the pandemic and the crypto boom.

Shares of Robinhood slipped as much as 10% on Thursday after the popular trading platform said in its earnings report that a boom in trading - driven heavily by cryptocurrencies - that doubled its revenues for the second quarter could fade in the coming months.

The stock pared early losses, and was trading lower by 7.31%, $46.16 as of 9:50 a.m. ET.

The slowdown, the company warned, will come as the economy opens up, causing people to spend less time at home.

The company posted total net revenues that increased 131% to $565 million, compared with $244 million in the second quarter of 2020.

The higher-than-expected revenue was boosted by new customers who invested in digital assets, such as bitcoin, ethereum, and dogecoin as the tokens soared to all-time highs earlier this year.

"Many of these factors worked in our favor," the company said in a statement. But for the next three months, Robinhood said it expects "seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer funded accounts than in the prior quarter."

Cryptocurrency trading revenue in the quarter increased 4,560% to $233 million in the second quarter, compared to $5 million in the same period last year. 60% of crypto trading revenue came from dogecoin, the meme token that has soared to dizzying highs this year.

Equities trading revenue, meanwhile, decreased 26% to $52 million in the second quarter, compared with $71 million in the second quarter of 2020.

The headwinds to Robinhood's business related to the easing of COVID-19 restrictions have some analysts fretting the app could struggle to keep users coming back.

"Robinhood's best days are behind it," David Trainer, CEO of New Constructs, an investment research firm, said in a statement. "The COVID-19 pandemic boosted the popularity of stock trading among retail investors, as people had more time to trade during the lockdowns of last year. Now, people are going back to their normal lives."

The Menlo Park, California-based firm posted a net loss of $502 million, or $2.16 per share, considerably wider than analyst estimates. Monthly active users increased 109% to 21.3 million in the quarter.

The online trading app went public on July 29 It priced its IPO at $38 per share, allocating nearly a third of its stock to retail investors.