Robinhoods users would very much like the opportunity to spend their money on a joke based on another joke.
Individual investors are calling for Robinhood Markets Inc. to list the meme coin of the moment, Shiba Inu a cryptocurrency that takes its name from the canine mascot of Dogecoin, itself a parody of Bitcoin.
By almost every conventional financial metric used to value an asset, SHIB as its known is essentially worthless. But in the crypto dimension, not only does it have value, but that value has also soared 100% over the past week, giving it a total market capitalization at least theoretically of more than $28 billion.
As Robinhood reported Tuesday that its crypto transaction revenue plunged 78% in the third quarter from the preceding three months, #SHIBARMY was trending on Twitter and social media was buzzing with retail traders demanding they be able to trade the coin on its app.
But the company said it wasnt ready. Despite the demand and tight competition from other brokerage platforms who have already listed Shiba Inu, the firm demurred and said the regulatory environment around new coins is still evolving.
Were going to be very careful, Robinhood Chief Executive Officer Vlad Tenev said on a conference call after
the company reported third-quarter revenue that fell short of Wall Street estimates. We hear this loud and clear, our customers want new coins.
The company said it would remain cautious about adding new coins, especially if they risk raising concerns from regulators as unregistered securities. Crypto wallets, which will soon be available on its platform, will allow users to then access other coins that Robinhood doesnt offer, according to Tenev.
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His trepidation might be warranted. There could be financial or reputational downside, said Mike Bailey, director of research at FBB Capital Partners. If there is a real expense and trading disappoints, then thats a problem. Alternatively if HOOD can list the coin cheaply, but investors either lose money or get frustrated in the new coin, then HOOD could see some damage to its reputation and sentiment.
But if its experience with Dogecoin is any indication, Robinhood has good reasons to jump into the latest trend. Roughly 64% of the companys $233 million in crypto revenue in the second quarter was due to that meme cryptocurrency.
But in the third quarter, crypto-related revenue fell to just $51 million as Dogecoin which had been hyped by billionaires including Elon Musk and Mark Cuban lost some of its luster. Shiba Inu which brands itself as The Dogecoin Killer is now taking its place in the hearts of memecoin enthusiasts.
Some investors are betting big on Shiba Inu, hoping to find quick returns after kicking themselves for missing the Dogecoin wave even if the new dog follows the same parabolic path.
People buying Shiba now saw it happen with Doge, said Matt Ville, 32, who put in $200 on Shiba Inu on Oct. 7. His investment is now worth about $1,800. Ville, who works at Best Buy and at a casino in South Florida, said he felt more certain about his Shiba Inu investment after it was listed on crypto-trading platform Coinbase.
Coinbase is very selective about the coins they put on their platform, he said. I knew this was going to be Dogecoin all over again.
Shiba Inu had pared some of its gains earlier this week after Musk the worlds richest person tweeted that he didnt own the coin. In a follow-up tweet, he said he had bought Bitcoin, Ether and Dogecoin, and thats it.
Out of curiosity, I acquired some ascii hash strings called Bitcoin, Ethereum & Doge. Thats it.
As Ive said before, dont bet the farm on crypto! True value is building products & providing services to your fellow human beings, not money in any form.
Elon Musk (@elonmusk) October 24, 2021
Meanwhile, a petition on Change.org imploring Robinhood to list SHIB on its platform has drawn more than 325,000 signatures. And some Robinhood customers are sending their inquiries directly to the company.
Max Gokhman, chief investment officer at AlphaTrAI, believes Robinhood will eventually list the coin.
I dont see any downsides, especially given its already on Coinbase, Gokhman said. Theres maybe a broader question of whether meme coins are something any exchange should be encouraging trading in, but that same argument can be made about pink sheets stocks that most brokerages offer.
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