Robinhood has seen over $331 million in revenue for the first quarter of this year from investors looking to get their trades executed, boosted by the frenzy of trading from early 2021, The Wall Street Journal (WSJ) reported.
The number is almost triple the $91 million in revenue from the same time in 2020, according to WSJ.
The chaos in the stock market in the early months of 2021 were brought on by a wave of interest in meme stocks like GameStop and AMC, in which millions of amateur investors downloaded the Robinhood app and piled onto the activity. They were buying stock that was considered to be unviable and causing trouble for hedge funds.
The activity reached a breaking point when Robinhood had to shut down trading on some of those stocks because the clearinghouse helping complete Robinhood’s trades asked it to post billions of dollars in additional collateral, which the company didn’t have, WSJ reported.
The decision to shut down the trades spurred lawsuits and customer complaints, along with a social media campaign for people to delete the app.
But the intense growth in the scope of the company’s user base is likely to play well for it as it gears up for its initial public offering (IPO), which is expected to be one of the biggest of 2021, WSJ reported. The strength of the business in January alone got investors to funnel $3.4 billion into the company. That was a boon for the company in the wake of its aforementioned troubles with the clearinghouse.
PYMNTS reported that Robinhood added 6 million users in the first two months of 2021. The numbers were a big boost as Robinhood had only seen around 200,000 new users per month before. Retail trading has increased as of late, and cryptocurrencies, including bitcoin, dogecoin and others, have seen a surge in popularity.