Robinhood Markets stock was falling early Wednesday. Wall Street analysts are skeptical about the digital brokerage’s ability to turn around a slump in trading on its platform.
Robinhood
stock (ticker: HOOD) was down 8.2% in premarket trading at $8.95. Shares are down from a peak of $85 in the summer of 2021 when the newly public company played a role in powering the meme-stock craze during the Covid-19 pandemic.
The company’s third-quarter loss was better than expected, but the market was focused on an 11% fall in transaction revenue from the same period a year earlier.
“We expect volumes to weaken from here as we enter the holiday season,” wrote J.P. Morgan analyst Kenneth Worthington in a research note.
Worthington said he continues to see Robinhood as limited in its ability to generate competitive margins due to its focus on small accounts. The company said its average revenue per user for the quarter was $80, down from $84 in the second quarter.
Worthington kept an Underweight rating on Robinhood stock with a $10 price target.
Robinhood’s next growth play is expansion of its brokerage operations to the U.K. and the beginning of cryptocurrency trading in the European Union. Needham analyst John Todaro wrote that international expansion should be helpful but there were concerns about Robinhood’s reduced crypto offering compared with rival
Coinbase
(COIN).
“We continue to see a challenging environment for transaction-based revenue and are sidelined as we see a difficult period for growth moving forward,” wrote Todaro.
Todaro kept a Hold rating on Robinhood stock with no price target.
Even bulls on the stock were turning more pessimistic. Mizuho’s Dan Dolev lowered his target price on Robinhood stock to $14 from $15 on the back of the revenue miss but kept a Buy rating.
“We remain very bullish on Robinhood’s longer-term outlook,” Dolev wrote, noting a moderating decline in monthly active users, and the company’s cost-control measures.
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