Analysts have increasingly high expectations from Robinhood
But high expectations can be a double-edged sword.
Morgan Stanley analysts are out Monday reiterating their bullish stance on trading app Robinhood, which is set to report earnings Wednesday. (Sherwood Media is an editorially independent subsidiary of Robinhood Markets Inc.)
They write:
“HOOD is a major beneficiary of three themes that are simultaneously unfolding: 1) secular market share gainer as the platform curates more content at an accelerated pace to win share from Gen Y/Z that’s moving into prime earnings years; 2) cyclical uplift in retail engagement (capital markets reopening, animal spirits reviving); and 3) de-regulation, particularly crypto with a friendlier regulatory backdrop that can unlock new revenue pools.”
Morgan Stanley, which upgraded its target for Q4 earnings per share to $0.44, is part of what seems like a rising trend of expectations for the company, given a record-breaking level of activity among retail traders.
As a result, analysts and investors are indicating they’re expecting Robinhood’s numbers to hit new highs for Q4 2024, with EPS of $0.41 (higher than Q2 2024’s record of $0.21) and revenue of roughly $935 million (topping Q2’s $682 million), according to the Street.
There’s some sense that traders are even more optimistic, with the company’s price-to-forward-earnings ratio topping 47, far higher than the the Nasdaq Composite’s multiple of 28.
Robinhood’s shares are already up roughly 50% this year, a run-up that may raise the risk disappointment when the official numbers are released.
(Full disclosure: I own Robinhood stock as part of my compensation.)
