Robinhood Q2 Earnings Preview: 24-Hour Trading, Crypto, Funded Accounts In Focus; Analyst Sees 'Favorable' Environment

Analysts see Robinhood Markets Inc HOOD having a favorable environment in the second quarter for equity and crypto, which will be among the items investors are watching when the company reports quarterly earnings on Wednesday after market close.

Earnings Estimates: Analysts expect Robinhood to report second-quarter revenue of $643.34 million according to data from Benzinga Pro.

The company reported revenue of $486.0 million in last year's second quarter and has beaten analysts' estimates for revenue in four of the last five quarters.

Analysts expect the company to report second-quarter earnings per share of 15 cents, compared to 3 cents per share in last year's second quarter. The company has beaten analysts' earnings per share estimates in five straight quarters.

The earnings report from Robinhood comes with the stock up 35% year-to-date in 2024, as viewed on the Benzinga Pro chart below.

Robinhood's earnings report also comes after the company saw issues with its trading platform during a stock market decline Monday and temporarily halted its overnight trading platform.

Read Also: Robinhood Expands AI Capabilities With Acquisition of Pluto Capital

What Analysts Are Saying: Higher equity, options and crypto volumes in the second quarter could show through for Robinhood in the company's earnings report, JPMorgan analyst Kenneth Worthington said.

"The 2Q environment was favorable for Robinhood given an appreciating and risk-on market," Worthington said.

The analyst, who has an Underweight rating and $16 price target, said April and May saw higher volumes, but data suggests June saw flat or negative volume growth.

"Separately, we've observed Robinhood lean deeper into crypto in 2Q24 with ongoing penetration of the European Union, the SEC's Wells Notice issuance, and Robinhood's announced acquisition of Bitstamp."

The analyst said Robinhood stock is increasingly correlated to the moves of Bitcoin BTC/USD, which could make commentary on cryptocurrency in the quarterly results and management comments more important.

"We suspect there may be some call commentary on the crypto opportunity, particularly around the U.S. spot token ETFs and/or Robinhood's increasing spot trading share."

The analyst said Robinhood's growth may not be sustainable and has limited room to be profitable with a focus on small accounts.

Bank of America upgraded shares of Robinhood in May and recently highlighted the company's strong position for near-term and long-term growth.

The investor note praised the company's focus on cutting costs, which could lead to higher free cash flow. The analyst said Robinhood's cost cuts and organic growth can create "a powerful earnings growth trajectory going forward."

Here are other recent analyst ratings on Robinhood and their price targets:

• Citigroup: Upgraded from Sell to Neutral, $18 price target
• KeyBanc: Maintained Overweight rating, raised price target from $23 to $25
• Goldman Sachs: Maintained Neutral rating, raised price target from $19 to $21
• Barclays: Maintained Underweight rating, raised price target from $18 to $20
• Piper Sandler: Maintained Neutral rating, raised price target from $18 to $20

Key Items to Watch: Along with revenue and earnings per share, analysts and investors will be looking at the company's key metrics like funded accounts, net deposits and Robinhood Gold subscribers.

The company said it recorded net deposits of $11.2 billion in the first quarter, with net positive transfers from many peer brokerages.

Robinhood hit a new high of 1.7 million Gold subscribers in the first quarter, helped by the Robinhood Gold Credit Card announcement. Investors and analysts will be looking to see if Gold saw similar growth and how the credit card is impacting the segment.

Another key metric could be commentary on the 24-hour market. The company said 24-hour trading passed $10 billion since its launch back in the first quarter. On Monday, the company said it would halt overnight trading due to an issue with its third-party execution partner.

The timing coincides with the stock markets and many top stocks declining Monday and could lead to some upset customers.

The second quarter report comes after posting records for revenue, net income and earnings per share in the first quarter. A weaker report could spook investors away, while similar growth in the second quarter could lead to a rally in Robinhood stock.

HOOD Price Action: Robinhood shares are up 5% to $17.26 on Tuesday, versus a 52-week trading range of $7.91 to $24.88. Robinhood stock is up 52% over the last year.

Read Next:

• Robinhood Markets’s Options: A Look at What the Big Money is Thinking

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