Robinhood’s crypto business continues to slide during Crypto Winter as clients steer clear of trading

Vlad Tenev, co-founder and CEO of Robinhood David Paul Morris—Bloomberg/Getty Images

Online brokerage Robinhood reported a sharp decline in crypto trading revenue in the last three months of 2022 compared to 2021 as its customers shied away from its platform’s crypto offerings amid the industry’s implosion.

Revenue from transactions fell 20%, the company said as part of its fourth-quarter earnings report on Tuesday. Fees collected fell to $39 million in the fourth quarter compared to $48 million in the same quarter last year.

Robinhood’s overall revenue rose slightly to $380 million in the latest quarter from $363 million in the same quarter of 2021. Meanwhile, the company’s loss narrowed to $166 million in the latest quarter from $423 million in the fourth quarter of 2021.

“We are now starting to see meaningful traction on a number of the products we launched, giving us confidence that they can grow into significant lines of business over time,” Robinhood CEO and co-founder Vlad Tenev said in a statement.

Shares of the online brokerage rose 5% to $11 in after-hours trading, following the release of the earnings report.

Robinhood has recently pivoted into the cryptocurrency market, launching a crypto wallet in August 2022. The decline in revenue from crypto transactions demonstrates the continued struggle of crypto and crypto-adjacent companies during the industry’s recent bear market.

Founded by Stanford University graduates Vlad Tenev and Baiju Bhatt in 2015, Robinhood makes most of its money from high-speed trading firms that pay for the right to execute stock transactions that users submit through the brokerage.

Early in the 2020 pandemic, Robinhood saw its fortunes skyrocket as millions, especially millennials and Gen Zers, flocked to the app to trade stocks. Because of its accessibility and relatively low fees, Robinhood also became a hotbed for trading memestocks, such as GameStop, AMC Entertainment, and Bed Bath & Beyond. (To the dismay of memestock traders, Robinhood temporarily halted the purchase of these shares in response to the sudden market frenzy.)

Building on the momentum in 2020, the company went public in July 2021, at $38 per share. While share prices briefly peaked at $55, prices have mostly fallen since the IPO, as legacy brokerages like Vanguard or TD Ameritrade pushed back the upstart.

Just a month before Robinhood went public, the Financial Industry Regulatory Authority issued a ban on the trading platform a $70 million fine in June 2021 for service disruptions in March 2020. And in August 2022, the New York State Department of Financial Services fined the company’s cryptocurrency division $30 million for “significant violations of the department’s anti-money laundering and cybersecurity regulations,” Adrienne Harris, the department’s superintendent, said in a statement.