Why Shiba Inu's Robinhood Rumors Are a Bigger Deal Than Dogecoin's Tesla News
Both Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE) gave investors something to smile about last week. On Wednesday, rumors of a potential listing on Robinhood (NASDAQ: HOOD) . Two days later, Elon Musk's tweet that Tesla (NASDAQ: TSLA) will allow merchandise to be purchased with Dogecoin .
Sure, both tokens have given up all of those gains and then some. But one of these stories could still have legs. Here's why Shiba Inu's Robinhood rumors are a bigger deal than Dogecoin's Tesla news.
Image source: Getty Images.
Chump change
Don't get me wrong: Tesla allowing Dogecoin to be used in buying the company's merchandise is good news. The move increases the meme coin's real-world utility. But the impact probably isn't all that great.
Tesla doesn't provide the details on exactly how much its merchandise sales are. These sales are lumped into the "services and other" category on the company's income statement. During the first nine months of 2021, Tesla reported services and other revenue of $2.74 billion.
The services referred to in the description include any non-warranty after-sales vehicle services. It seems reasonable to conclude that these services make up the biggest part of the line item. In addition, the category includes sales of used vehicles, sales by any of Tesla's acquired subsidiaries to third parties, and vehicle insurance revenue. Retail merchandise likely generates only a sliver of the total revenue for the line item.
Then there's the question of how often customers will use Dogecoin to buy Tesla merchandise. Even if the digital token was used for 10% of purchases (which is a stretch), the total would still be relatively small -- and certainly not enough to justify Dogecoin's market cap rising more than $2 billion last week.
Expanding the demand
But if Robinhood allows Shiba Inu to be traded on its platform, it should provide a big boost to the adoption of the meme coin. The (like the valuations of all assets) hinge largely on supply and demand. Robinhood listing Shiba Inu would very likely increase the demand for the token.
Robinhood reported that it had 18.9 million monthly active users in the third quarter of 2021. Crypto generated more than 19% of the company's transaction-based revenue in the quarter.
The trading platform only supports buying and selling six cryptocurrencies right now, though. It seems to be a near-certainty that more investors would buy Shiba Inu if it were available on Robinhood.
How much ? I think Dogecoin provides a good case study. Dogecoin's price jumped nearly 40% in the days following its addition to the Robinhood trading platform.
Buy the rumor?
Should you follow the old Wall Street advice for stocks and buy the rumor with Shiba Inu? Before doing so, keep in mind that the Robinhood rumors could already be largely baked into the cryptocurrency's price. Also, don't discount the possibility that Robinhood's management could take a long time before adding Shiba Inu -- if it does so at all.
I think that Robinhood listing Shiba Inu would easily trump Tesla allowing retail merchandise to be purchased using Dogecoin in terms of importance for the two coins. However, Tesla has made its decision while Robinhood hasn't.
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