Robinhood Analysts 'Pleasantly Surprised' By Crypto Volume, Q2 Start: 'We See A Number Of Reasons To Be Positive'

Stock and cryptocurrency trading platform company Robinhood Markets Inc HOOD reported first-quarter financial results after market close Wednesday.

Analysts react to the revenue and earnings per share beat and what's next for the company.

The Robinhood Analysts: Piper Sandler analyst Patrick Moley has a Neutral rating and raises the price target from $17 to $18.

• KeyBanc analyst Alex Markgrafff has an Overweight rating and $23 price target.
• Goldman Sachs analyst Will Nance has a Neutral rating and $20 price target.
• Needham analyst John Todaro has a Hold rating and no price target.
• JPMorgan analyst Kenneth Worthington has an Underweight rating and raises the price target from $12 to $16.
• Mizuho analyst Dan Dolev has a Buy rating and raises the price target from $21 to $23.
• JMP Securities analyst Devin Ryan has a Market Outperform rating and raises the price target from $28 to $30.

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Piper Sandler: Stronger than expected transaction revenues helped beat first-quarter estimates Moley said.

The analyst highlights strong early results in the month of April shared by Robinhood.

"In April, HOOD said net deposits were a monthly record $5B," Moley said.

Moley said Robinhood shares are trading higher likely due to the first quarter beat and strong trends in April.

KeyBanc: The asset trading company had "lots of good" in the first quarter, Markgraff said.

"We raise our FY24 revenue estimate mostly on better transaction revenue, much of which drops to adj. EBITDA," Markgraff said.

The analyst said Robinhood saw strong net deposit growth in the quarter.

"While we do not expect the journey to be linear, we believe Robinhood is poised to continue FinApp leadership and grow ARPU."

Goldman Sachs: Retail trading in the first quarter helped the company beat analysts' estimates, Nance said.

"We expect shares to react favorably following standout results that significantly exceed expectations," Nance said.

The analyst highlights Robinhood's large increase in cryptocurrency trading-related revenue in the first quarter.

"Looking ahead, we see a number of reasons to be positive."

While the quarter was strong and there are positives ahead, like a strong start to the second quarter with records set in April, the analyst cautions on the risk/reward.

"With rates likely near the peak and with retail trading volumes also near a cyclical high, we continue to see the risk reward as balanced."

Needham: Strong results in trading activity and with managing expenses were witnessed in the first-quarter results, Todaro said.

The analyst was "pleasantly surprised" with crypto trading volume in the first quarter.

"April activity is coming in strong across equities, options, and crypto indicating a positive trend for Q2, but we believe crypto volumes have come down in May on the back of a cooling off in retail sentiment in the space which we believe could linger for Q2," Todaro said.

The analyst said record options activity in April could be the story to watch and could help Q2 total transaction revenue grow.

"While we see Q2 crypto volumes being below Q1s, we remain bullish on crypto activity for full year 2024. As such, we increased our total crypto volume & revenue in 2024."

JPMorgan: The company provided a "strong beat in ideal environment" in the first quarter, Worthington said.

"1Q24 was an incredibly favorable revenue environment for Robinhood with strong equity markets, incremental return of retail, and rallying crypto prices," Worthington said.

The analyst said the average revenue per user of $103 was only slightly below an all-time peak of $116 which happened during the "meme-stock era" of early 2021.

"While Robinhood benefited from cyclical market strength, we also saw instances of true growth with Robinhood capturing ~$2.8bn net deposits from competitors, +260k Gold subscribers, and +500k funded accounts."

Mizuho: Momentum from the first quarter carried over into the second quarter with strong April volumes, Dolev said.

The analyst said the first quarter was "as good as we could have hoped for."

"1Q was amongst the strongest prints we have seen in recent quarters across FinTech," Dolev said.

The analyst is encouraged by the early second quarter results with April seeing several records set.

"We are raising our estimates for FY24 and FY25 to reflect the continued solid execution at HOOD."

JMP Securities: Growth at the Fintech company is "notably still accelerating," Ryan said.

The analyst said record revenue and expense disciplines were highlights in the results.

"We expect further acceleration in deposits and new customers, with enhancements to Gold offering also increasingly contributing," Ryan said.

The analyst said Robinhood can continue to deliver strong growth and profitability, potentially outperforming expectations.

"We further argue the company is still in a position to meaningfully outperform market expectations from here."

HOOD Price Action: Robinhood shares are up 1% to $17.99 on Thursday versus a 52-week trading range of $7.91 to $20.55. Robinhood shares are up 102% over the last year.

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