Robinhood Markets (HOOD) is expected to report fourth-quarter results on Thursday after the closing bell as shares of the commission-based trading platform are trading at all-time lows.
Here are the consensus estimates expected by Wall Street analysts, according to data from Bloomberg.
Adjusted earnings (loss) per share: -0.42 cent vs. -$2.06 reported in Q3
Income: $370.92 million compared to $364.92 million in Q3
The trading platform is expected to provide an update on its new crypto wallet, which began beta testing on January 20. Robinhood has been laser-focused on rolling out the new crypto product as it aims to expand its platform and become a destination wallet for its customers.
The company experienced a slowdown in trading in the third quarter of last year, as crypto revenue fell 78% from the previous three-month period. In the second quarter, Robinhood saw record revenue from crypto transactions, buoyed by the massive popularity of Dogecoin (DOGE-USD).
Shares of the investment platform are down about 60% from their IPO price of $38 in July, amid slowing retail trade and less stimulus cash available. Investors also offloaded stocks that benefited from the pandemic amid continued inflation and expected rate hikes from the Fed.
“Robinhood had all the tailwinds you could want leading up to their IPO. The problem they had was that it all basically happened in the last eight to 10 months,” Hugh Tallents said. , senior partner at management consultancy cg42, to Yahoo Finance.
“They had five years of success in their business plan built into that IPO price. Now you’re starting to see it valued more like a palm than a technology, and that multiple isn’t necessarily attractive” , Tallents added.
Last year, Robinhood faced backlash over its decision to temporarily restrict trading in video game retailer GameStop (GME) and other so-called meme stocks. The trading app then underwent regulatory scrutiny over the gamification of stock trading and its use of payment for order flow (PFOF), where brokers route trade orders to makers. market and receive a commission for their execution. More recently, Robinhood has become less reliant on the controversial practice as a way to make money, with PFOF as a percentage of revenue falling quarter over quarter.
With its market capitalization just below $11 billion and around 22.5 million active users, the company could start to look like an attractive acquisition target.
One scenario could be “someone like PayPal who said they want to get into the brokerage space, could pick them up for pennies on the dollar when it comes to the IPO,” Tallents said.
“Certainly they’re a great fit for them in terms of lower balance, more frequent transaction mindset, engagement mindset, technology first, scalability potential,” said he added.
The stock has eight buy, seven hold and two sell ratings from analysts, with an average price target of $29 per share.
Ines is a market reporter and covers stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre
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