Robinhood Q3 Earnings Preview: Will Bulls Tout Turnaround On Heels Of X1 Deal?

Robinhood Markets Inc HOOD will be reporting its third-quarter (Q3) earnings on Nov. 7 after market hours.

The Menlo Park, California-based company is popular among younger investors due to its user-friendly platform and zero-commission trading. Wall Street analysts expect Robinhood to report a negative 10 cents in EPS and $478.41 million in revenue.

Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Business & Fundamentals: Many brokerages, such as Interactive Brokers IBKR, now offer the same zero-commission moat that Robinhood offers.

Robinhood is reflecting some rebound in sales and income, along with a decline in operating expenses. Transaction revenues have also begun to stabilize. Moreover, the company stands to benefit from high-interest rates. Interest revenues comprise the most significant portion of Robinhood’s total net revenues (48% of Q2 revenue).

The X1 acquisition could be disruptive for the business, and HOOD bulls may start touting a turnaround potential from here.

Also Read: Celebrating 10-Year Anniversary: How Robinhood Revolutionized Finance And Made It More Accessible To The Masses

Q3 Analysts' Focus: Wall Street watchers and analysts of HOOD stock would be hoping for the company to report healthier sales and expense numbers. Analysts are also eying expected synergies from the X1 acquisition and outlook for the year ahead.

Robinhood Ratings & Consensus Estimates

Price targets for HOOD stock have recently been lowered by many analysts. Michael Cyprys of Morgan Stanley lowered his target from $13 to $12. Devin Ryan of JMP Securities lowered from $25 to $24, and Barclays’ Ross Sandler lowered from $11 to $10. Consensus price target on the stock stands at $14.12 as sell-side analysts rate it Neutral.

Price Action: HOOD stock was trading at $9.59 a share at market close on Nov. 6. The stock has been largely range-bound between $9 and $10.15 over the past month.

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