Robinhood Analysts Praise Q3 Earnings, 'Product Innovation': Are Expectations Now Running High For Coinbase?

Equity and crypto trading company Robinhood Markets Inc HOOD reported quarterly results Wednesday that came in better than expected and had several items investors and analysts liked going forward.

The report from Robinhood could be a major line in the sand for Coinbase Global Inc COIN before it reports quarterly results after the market closes today (Thursday).

Robinhood Earnings: Robinhood reported third-quarter revenue of $361 million, which was up 14% sequentially. The revenue total beat a Street estimate of $355.27 million, according to data from Benzinga Pro.

The company also beat Street estimates for earnings per share and reported it reached adjusted EBITDA profitability a quarter earlier than planned.

Robinhood ended the third quarter with 12.2 million monthly active users, down 1.8 million from the prior quarter. The company had 22.9 million funded accounts, up around 60,000 from the last quarter.

In the third quarter, Robinhood saw equities and options-related transaction revenue up sequentially but stated cryptocurrency trading revenue was down 12% from the second quarter. This could be a sign of weakness for Coinbase ahead of its report.

Morgan Stanley analyst Michael Cyprys said the profitability coming early from Robinhood was a positive.

“3Q’s profitability infection should enhance investor confidence in management strategy and signal a potential change in sentiment among investors who viewed losses as critical investment hurdle,” Cyprys said.

The analyst had an Equal-Weight rating and a $12 price target.

Cyprys said user growth and engagement challenges remained, which come during a tough macroeconomic time. October's engagement mentioned by Robinhood was “encouraging” to the analyst.

KeyBanc Capital Markets analyst Josh Beck said Robinhood could benefit from new products going forward.

“Product innovation continued with products like instant deposit and extended trading hours,” Beck said.

The analyst had an Overweight rating and raised the price target from $11 to $13.

New cryptocurrencies being added and the rollout of Robinhood Wallets were also listed by the analyst as reasons for optimism ahead.

Related Link: What's Going On With Robinhood Markets Stock Today? 

Coinbase Earnings: Coinbase will report third-quarter financial results after the market close Thursday. Analysts expect the company to post revenue of $659.88 million, according to data from Benzinga Pro.

The company reported revenue of $808.33 million in the second quarter, which missed estimates from analysts. The company also missed estimates for earnings per share, reporting a loss of $4.98 per share in the second quarter.

Coinbase had a trading volume of $217 billion in the second quarter, down 30% from the first quarter. Another big drop for the company could have investors losing optimism going forward.

Monthly transacting users were 9 million in the second quarter, down 2% from the first quarter. Coinbase expects monthly transacting users to be in a range of 7 million to 9 million for the full fiscal year.

Based on Robinhood’s earnings report, investors will likely be watching to see if Coinbase beats Street estimates. Investors will also be keying in on the company’s user base and engagement.

With declines in revenue and users from the prior year period expected, investors and analysts will likely be focusing on comments from Coinbase on what’s to come in terms of new products and offerings.

Robinhood beat estimates and highlighted a slate of new product launches that have shares up on Thursday.

HOOD, COIN Price Action: At publication Thursday, Robinhood shares were up 9.19% to $12.46 and Coinbase shares were down 2.77% to $59.03.

Read Next: What Analysts Think Of Coinbase 

Photo: rblfmr via Shutterstock