Listing Shiba Inu (SHIB-USD) on Robinhood Markets (NASDAQ:HOOD) days after Goldman Sachs downgraded the company to a sell is a strategic move to halt HOOD stock’s bearish trend as evident in the last five trading sessions.
Shiba Inu has one of the largest cryptocurrency followings and presently has over 1.1 million holders. However, despite Binance, the world’s largest cryptocurrency exchange platform, and Coinbase (NASDAQ:COIN) listing it in 2021, Robinhood turned down the token.
In fact, Christine Brown, former Chief Operating Officer of Robinhood Crypto, during an interview with Decrypt’s Dan Roberts in 2021, claimed the short-term gain of listing a lot of assets isn’t worth the risk for Robinhood users.
That tune seems to have changed slightly since November. Or at least Robinhood now sees some relative safety in Shiba Inu. Shortly after Goldman Sachs’s downgrade, Robinhood listed more than SHIB. It also listed Compound (COMP-USD), Polygon (MATIC-USD) and Solana (SOL-USD). That makes four of the world’s fastest-growing cryptocurrencies to lure new users to the platform.
Here is the logic. Robinhood cryptocurrency revenue rose by 304% from $12 million in the fourth quarter of 2020 to $48 million in 2021 year over year (YOY). Further, cryptocurrency revenue jumped from $27 million in 2020 to a whopping $419 million in 2021. Basically, cryptocurrency is Robinhood’s largest scaling source of revenue, meaning it needs to continue this explosive growth if it wants to turn a profit.
Goldman Sachs cited user decline as a reason for the downgrade, especially after monthly users declined by 8% in the fourth quarter of 2021 YOY.
It’s likely Robinhood listed a meme token like Shiba Inu to gain some traction on its platform. The token doesn’t really have much utility, especially compared to the peers it was listed with like Polygon and Solana, but it has a large base of holders. That’s what Robinhood’s after, at the end of the day.
On the date of publication, Samed Olukoya did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.