Robinhood Markets Inc (NASDAQ:HOOD) shares are down in early trading on Wednesday, after the company reported its third-quarter results on Tuesday.
Here are some key analyst takeaways:
- Scotiabank analyst Lance Jessurun maintained a Sector Outperform rating, while slashing the price target from $136 to $124.
- Needham analyst John Todaro reiterated a Buy rating, while reducing the price target from $126 to $116.
- KeyBanc Capital Markets analyst Alex Markgraff reaffirmed an Overweight rating, while cutting the price target from $140 to $135.
- Rosenblatt Securities analyst Chris Brendler maintained a Buy rating and price target of $135.
- Cantor Fitzgerald analyst Ramsey El-Assal reiterated an Overweight rating and price target of $150.
- BTIG analyst Andrew Harte reaffirmed a Buy rating and price target of $135.
- Citizens JMP Securities analyst Devin Ryan reiterated a Market Outperform and price target of $165.
- Benchmark analyst Mark Palmer maintained a Buy rating and price target of $170.
Check out other analyst stock ratings.
Scotiabank: Although Robinhood Markets reported record revenues of $1.42 billion, GAAP earnings declined by around 16% to 51 cents per share, Jessurun said in a note. Earnings were impacted by $67 million of unrealized losses at Robinhood Ventures, he added.
Total net revenue came in around $5 million short of consensus, with crypto revenue contracting by around 50% to about $120 million, the analyst stated. Management is sacrificing profits to increase market share in every vertical, which seems to be “the right trade,” as it allows the company to “recapture economics later without touching customer pricing,” Jessurun further wrote.
Needham: Robinhood Markets reported adjusted EBITDA of $808 million, beating consensus of $766 million, Todaro said. While trading activity hit record highs across the company’s business lines in the third quarter, October numbers are trending significantly lower than the third-quarter average, he added.
“Concerns on lower trading activity following the AI sell-off were somewhat mitigated as Mgmt noted that retail were net-buyers during the recent downturn,” the analyst wrote. While activity for equities and options could trend lower in the fourth quarter, prediction market estimates have been raised, he noted.
KeyBanc Capital Markets: Robinhood Markets’ results were mixed, with healthy volumes being offset by “lower monetization on product-specific mix factors,” Markgraff said. Revenue grew 12% year-on-year to $1.42 billion but marginally missed Street expectations of $1.43 billion, he added.
While funded customers grew 7% year-on-year to 28.7 million, this was slightly below estimates of 28.8 million, the analyst stated. October volumes to date and take rate commentary were modestly below expectations, he further noted.
Rosenblatt Securities: Robinhood Markets’ results were disappointing compared to its “success-driven high bar,” Brendler said. Revenue grew 12% year-on-year and 9% sequentially but missed estimates, he added.
The revenue shortfall was due to lower take rates rather than volume, the analyst stated. The company “continued to make impressive progress on multiple growth initiatives as Rothera became its 14th business with a $100+M run-rate in just its first full quarter,” he further wrote.
Cantor Fitzgerald: Robinhood Markets’ earnings miss was not indicative of a deterioration in its core business performance, El-Assal said. Excluding the impact of unrealized losses at Robinhood Ventures, earnings would have exceeded expectations, he noted.
The stock sell-off following the results was due to the modest revenue miss and a softer start to fourth-quarter trading activity, the analyst stated. He highlighted that the following factors could drive momentum going ahead:
- Robinhood Chain
- International expansion
- Launch of perpetual futures
- Upcoming rollout of earnings event contracts
- Recent strategic partnerships with OG.com and Ripple
BTIG: Robinhood Markets’ record revenues and continued Robinhood Gold adoption were the key positives in the quarter, Harte said. He added that the stock was down due to:
- Softer transaction monetization during the third quarter
- Trump Accounts driving a significant amount of net deposits growth
While the weakness in transaction monetization was “driven by asset mix rather than structural pressure,” the analyst stated. Trump Accounts driving net deposits growth “is good for the long term but in the near term means lower-monetized total platform assets,” he further wrote.
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Citizens JMP Securities: Although Robinhood Markets reported “modest revenue shortfalls across several lines,” profitability was better than expectations, Ryan said.
“Robinhood’s monthly disclosures make a large revenue surprise increasingly difficult, which often leaves the earnings reaction resting on relatively small differences in monetization,” the analyst wrote. The pullback in the stock presents “another opportunity to own the shares,” he further stated.
Benchmark: Robinhood Markets reported record revenue and adjusted EBITDA, yet its share price fell around 7% in extended trading, Palmer said. He added that the pressure on the stock was due to:
- Earnings of 51 cents per share missing Street estimate of 56 cents per share.
- Revenue of $1.42 billion coming in short of the $1.43 billion consensus.
- Crypto revenue contracting by 55% to $120 million.
- Monthly active users of around 13 million falling short of expectations of 14.4 million.
HOOD Price Action: Shares of Robinhood Markets had declined by 3.14% to $91.60 at the time of publication on Wednesday.
