Robinhood Reports Earnings Today — Here’s What To Expect

Robinhood Markets (HOOD) is slated to announce fourth-quarter earnings after the bell on Thursday, despite the fact that the commission-free trading platform's shares have been trading at all-time lows.

According to Bloomberg statistics, the following are the consensus forecasts anticipated by Wall Street analysts. Loss per share: -.49 cents compared to -.42 cents expected

Revenue: $362.7 million vs $370.92 million expected

Crypto Revenue: $48 million vs $55 million expected

Monthly Active Users: 17.3 million vs 19.9 million expected

The trading platform is anticipated to provide an update on the beta testing of its new cryptocurrency wallet, which began on Jan. 20. Robinhood has been laser-focused on launching the new cryptocurrency product as part of its strategy to grow its platform and establish itself as a destination wallet for its consumers.

Trading activity slowed in the third quarter of last year, with cryptocurrency income plunging 78% from the preceding three-month period. Robinhood reported high income from cryptocurrency transactions in the second quarter, boosted by Dogecoin's huge popularity (DOGE-USD). The investment platform's shares are down around 60% from their July IPO price of $38, owing to a slowdown in retail trading and a reduction of stimulus cash on hand. Additionally, investors have started dumping equities that profited from the Covid outbreak, citing continued inflation and the Fed's predicted rate rises.

"Robinhood benefited from every possible tailwind leading up to its first public offering. The issue they've had is that all of those have essentially unraveled in the last eight to ten months," Hugh Tallents, senior partner at management consulting firm cg42, told Yahoo Finance.

"Their IPO pricing was predicated on five years of business plan success. Now you're seeing it priced more like a financial asset than a technology asset, and that multiple isn't always favorable," Tallents noted.

Robinhood attracted controversy last year for temporarily restricting trading in video game company GameStop (GME) and other so-called meme stocks. The trading software was then scrutinized by regulators for its gamification of stock trading and usage of payment for order flow (PFOF), a practice in which brokers send trade orders to market makers in exchange for a charge for their execution. Recently, Robinhood has relied less on the contentious technique to generate income, with PFOF as a proportion of sales declining quarter over quarter.

With a market capitalization of little under $11 billion and over 22.5 million active users, the firm may be an intriguing acquisition candidate.

One possibility is that "someone like PayPal, who has indicated an interest in entering the brokerage area, may acquire them for pennies on the dollar in connection with the IPO," Tallents added.

"Certainly, they match them well in terms of lower balance, greater frequency transaction attitude, engagement mindset, technology first, and scaling potential," he added.

Eight analysts have assigned the stocks of the company as a Buy recommendation, seven a Hold rating, and two a Sell rating, with an average price target of $29 per share