Shares of financial services platform Robinhood Markets (NASDAQ:HOOD) sank 8.3% in after-hours trading yesterday after missing third-quarter sales estimates. Robinhood’s revenues jumped 29% year-over-year to $467 million but came in lower than the analysts’ expectations of $479.51 million. Further, a 16% year-over-year decline in monthly active users (MAU) and an 11% fall in transaction-based revenues dented investor sentiment.
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On a brighter note, the company posted a diluted loss of $0.09 per share, one cent lower than the consensus loss. Also, the net loss narrowed from the prior-year quarter figure of $0.20 per share. In the meantime, net interest revenues grew 96% year-over-year to $251 million, thanks to the higher interest rate environment.
Looking ahead, the company expects softer trading volumes to continue in November and December due to the seasonality effect. Further, CFO Jason Warnick said in the post-earnings call, “If the current levels of securities lending and free credit balances continue, we anticipate Q4 net interest revenue will be roughly $20 million lower than Q3 levels.”
On a positive note, Robinhood plans to launch cryptocurrency trading in the European Union soon after it successfully launches its brokerage unit in the U.K. This news comes regardless of the fact that Robinhood’s crypto revenues fell 55% compared to last year.
Is HOOD a Good Stock to Buy?
On TipRanks, Robinhood stock has a Hold consensus rating. This is based on three Buys, six Holds, and two Sell ratings. Also, the average Robinhood Markets price forecast of $12.65 implies 29.6% upside potential from current levels. Year-to-date, HOOD stock has gained 20.8%.
