Robinhood Falls Below IPO Price After 3Q Results Miss
October 27 2021 - 12:03PM
Dow Jones News
By Michael Dabaie
Robinhood Markets Inc. shares fell in Wednesday trading after
quarterly revenue missed analyst views.
Shares were down 9% at $35.96 in late morning trading, putting
them below the company's initial public offering price of $38 from
this summer.
The financial services platform company reported after the bell
Tuesday reported third-quarter total net revenue of $365 million,
up on year but missing FactSet consensus for $437.1 million.
Transaction-based revenue of $267 million was below the $325.3
million FactSet consensus.
Options increased 29% to $164 million, above FactSet consensus
of $154.6 million. Cryptocurrencies increased 860% to $51 million,
but came in below FactSet consensus for $125.7 million. Crypto
activity declined from record highs in the prior quarter, leading
to considerably fewer new funded accounts, the company said.
Equities decreased 27% to $50 million and missed FactSet
consensus of $59.2 million.
Net loss was $2.06 per share. Adjusted earnings before interest,
taxes, depreciation and amortization was negative $84 million,
compared with positive $59 million in the third quarter of
2020.
"With top-line results significantly below expectations (ours as
well as consensus), lower [monthly active users], declining
[average revenue per user], very negative adjusted Ebitda...and
disappointing 4Q guidance including no uptick in new funded
accounts, we believe 3Q may be poorly received and we expect a
negative stock reaction," Mizuho Securities USA said in a note.
Although results were lackluster, there were a few positives,
including progress on crypto wallet, with a million wait list
sign-ups and a more normalized equities/crypto revenue mix, Mizuho
said.
"We have highlighted that we estimate Robinhood has a higher
market penetration leaving less room for growth, a hypothesis
supported by the 3Q results," J.P. Morgan said in an analyst
note.
"The core of Robinhood's earnings is trading revenues, which
fell more than expected," J.P. Morgan said, pointing to equity
trading as particularly weak.
"We believe Robinhood has been overearning and guidance will
weaken for '22," said J.P. Morgan, which rates the stock at
Underweight. JPM lowered its price target to $26 from $35.
KeyBanc Capital Markets, which rates shares at Overweight,
lowered its estimates and price target, but said it remained
constructive on several catalysts that could boost strategic
perception, including Cash Management scaling, yield enhancements,
the Crypto wallet launch and automatic account transfers-in.
Write to Michael Dabaie at michael.dabaie@wsj.com
(END) Dow Jones Newswires
October 27, 2021 11:48 ET (15:48 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Robinhood Markets (NASDAQ:HOOD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Robinhood Markets (NASDAQ:HOOD)
Historical Stock Chart
From Apr 2023 to Apr 2024