HOOD Stock Falls Over 5% In Friday Pre-Market: What's Going On?
Robinhood Markets, Inc. (HOOD) stock fell 5.5% in pre-market trading due to concerns over profitability from smaller accounts and declining crypto trading volumes. Despite a strong Q2 revenue of $989 million, beating estimates, analysts express mixed views. JP Morgan maintained a Neutral rating with a price target increase to $104, citing long-term profitability concerns. Conversely, Cantor and Needham analysts raised their price targets significantly, highlighting strong Q3 performance and product innovation. CEO Vlad Tenev sees potential in equity tokenization as a growth opportunity.
Robinhood Markets, Inc. HOOD stock declined 5.5% during Friday pre-market amid concerns over profitability of smaller accounts and low crypto trading volumes.
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Q2 Beats Expectations, But Concerns Linger Over Profitability, Competitive Scale
Robinhood’s Q2 revenue hit $989.0 million, marking a 45% increase year-over-year and beating the Street’s estimate of $898.95 million.
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Kenneth B. Worthington from JP Morgan retained a Neutral rating but increased his price target from $98 to $104. Despite Robinhood’s impressive results and controlled operating expenses, Worthington expressed concerns about the long-term profitability of the platform’s smaller accounts. He also pointed out that Robinhood still trails behind larger competitors in terms of product range and scale.
Robinhood’s Q2 performance and the subsequent drop in its stock value came as the total crypto trading volume fell 39% sequentially due to lower market volatility. Notably, the crypto volume increased in July. Investment firm Bernstein believes that the crypto bull cycle is still in its “early stages,” which could potentially benefit Robinhood in a lead up to the next quarter.
Analysts Bullish Amid Product Growth, Operating Leverage, CEO Sees Tokenization Potential
Brett Knoblauch from Cantor reaffirmed an Overweight rating and raised his price target from $100 to $118. Knoblauch emphasized the firm’s strong start to Q3, with net deposits in July exceeding $6 billion and equity and options volumes expected to hit record highs. He also mentioned that product innovation is fueling user growth and increasing Robinhood’s share of customer wallets.
John Todaro from Needham maintained a Buy rating and significantly upped his price forecast from $71 to $120. Todaro conveyed increased confidence in the company’s potential to enhance operating leverage, lifting the projected 2026 EBITDA margin to around 65%. He also raised the fiscal 2025 revenue forecast to $4.342 billion, up from $3.941 billion.
Moreover, Robinhood CEO Vlad Tenev expressed a positive outlook towards the future of equity tokenization in the U.S. during the company's Q2 earnings call. Tenev believes that tokenizing assets that were previously inaccessible, such as private markets, presents a “real opportunity” in the U.S.
- Robinhood Q2: Double Beat, Crypto Revenue Nearly Doubles
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