Robinhood Stock Drops After Earnings Miss, but Analyst Remains Optimistic

Robinhood Markets Inc. (HOOD) saw its shares plunge by over 13% in premarket trading on Thursday following a third-quarter earnings report that fell short of Wall Street’s expectations. The company reported lower-than-expected revenue and declines in key growth metrics, leading to a swift negative reaction from investors. However, JMP Securities remains confident, raising its price target to $33 and maintaining a bullish outlook.

Robinhood’s Q3 Earnings Miss Raises Concerns

Robinhood’s third-quarter results missed consensus revenue estimates, largely due to a slowdown in account growth, lower net asset additions, and fewer new “Gold” account subscriptions. Despite these challenges, the company successfully managed its expenses, which helped support its earnings per share (EPS) for the quarter, according to JPMorgan analysts.

In light of these results, JPMorgan revised its price target for Robinhood to $20, down from $21, and kept an “underweight” rating on the stock, cautioning that the dip may indicate a seasonal deceleration following a strong first half of 2024.

Investor Caution on Robinhood’s Net Deposits

Robinhood reported net deposits of $10 billion for Q3—its lowest figure this year and falling below JPMorgan’s estimate of $11.2 billion. Citi analysts shared a similar outlook, rating Robinhood as “neutral” with a $23 price target, noting that despite optimistic October commentary from the company, recent outperformance and the Q3 revenue miss could exert downward pressure on the stock.

JMP Securities Remains Bullish Despite Initial Stock Drop

Amid the general market reaction, JMP Securities stands out with a positive stance on Robinhood. The firm regarded the initial stock drop as a “knee-jerk reaction,” emphasizing that Robinhood’s Q3 results were close to JMP’s internal projections and only slightly missed broader market expectations.

JMP Securities increased its Robinhood price target to $33 from $30, citing the company’s long-term growth prospects and maintaining a “market outperform” rating on the stock.

Robinhood’s Future Outlook

As Robinhood navigates a challenging Q3, analysts and investors will be closely watching its financials and growth metrics over the coming quarters.

For those seeking deeper insights into Robinhood’s performance, read our full Robinhood review here to understand the company’s strengths, strategies, and challenges.