Robinhood Posts Weak Third Quarter Results; Shares Fall 8.5%

Shares of Robinhood Markets, Inc. (HOOD) declined 8.5% to close at $36.22 in Tuesday’s extended trade as the company reported weaker-than-expected results for the third quarter ended September 30, 2021.

Robinhood is a financial services company that pioneered the concept of commission-free trades of stocks, exchange-traded funds and cryptocurrencies.

Robinhood reported quarterly net revenues of $365 million, up 35% from the same quarter last year. A 32% year-over-year growth in Transaction-based revenues to $266.8 million was majorly responsible for the overall growth in net revenues, along with a yearly rise of 26% in net interest revenues. Net revenues, however, failed to surpass the consensus estimate of $431.27 million.

The company reported a quarterly loss per share of $2.06, wider than the consensus estimate of a loss of $1.36 per share. The company had reported a loss of $0.05 per share in the same quarter last year.

In other key operating metrics, HOOD witnessed a 76% year-over-year rise in Monthly Active Users to 18.9 million, while Assets Under Custody rose to $95 billion from $44 billion last year. Average Revenues Per User, however, declined 36% year-over-year to $65.

The CEO of Robinhood, Vlad Tenev, said, “This quarter was about developing more products and services for our customers, including crypto wallets. More than one million people have joined our crypto wallets waitlist to date. With 24/7 live phone support, we believe that Robinhood is becoming the most trusted and intuitive platform for retail and crypto investors.” (See Robinhoodstock chart on TipRanks)

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On October 27, Rosenblatt Securities analyst Sean Horgan reiterated a Buy rating on the stock. The analyst’s price target of $50 implies upside potential of 26.4%.

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 8 Buys, 5 Holds and 1 Sell. The average Robinhood price target of $52.62 implies that the stock has upside potential of 33% from current levels.

Robinhood scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained about 13.6% over the past year.

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