- Robinhood Markets (HOOD) is set to report earnings following a quarter of increased retail trading activity. The stock has doubled in the past year but faced a crucial test on Wednesday.
- The company recently received a Wells Notice from the Securities and Exchange Commission, indicating potential enforcement action over cryptocurrency trading on its platform.
- Analysts predict a 25% year-over-year rebound in revenue, marking Robinhood’s highest quarterly revenue since Q2 2021.
Robinhood is set to report earnings following a surge in retail trading activity. However, the company faces potential SEC enforcement action over cryptocurrency trading. This article delves into the details and what it means for investors.
Robinhood Earnings
Analysts, on average, expect Robinhood earnings of 6 cents per share vs. a loss of 57 cents a year ago. Revenue is seen rebounding 25%, year over year, according to FactSet. This would mark the Robinhood’s highest quarterly revenue since Q2 2021, which got a boost from meme stock mania amid the pandemic. Check back after the close for results. Analysts expect the first annual profit in 2024, of 30 cents per share. Robinhood, the upstart online brokerage which made its public debut in 2021, has an inconsistent history of quarterly profits.
Robinhood Stock
Shares of the zero-commission trading app eased 1.1% to 17.80 on the stock market today. Robinhood stock retested the 50-day moving average Wednesday after regaining that support level week. A decisive move above the 50-day would offer an early entry in an emerging consolidation, using Monday’s high of 18.46 as specific trigger. HOOD stock is on track to have a base with a 20.55 buy point, the MarketSmith pattern recognition shows. The relative strength line for Robinhood stock has drifted lower since end of March. The RS line, the blue line in the chart above, shows how a stock is performing vs. the S&P 500. Among other online brokers, Charles Schwab (SCHW), Interactive Brokers (IBKR) and E-Trade owner Morgan Stanley (MS) tried to gain Wednesday.
Robinhood Wells Notice
On Monday, Robinhood disclosed an enforcement action notice from the SEC over crypto trading on its retail platform. The so-called Wells Notice could portend enforcement action. Such notices do not necessarily mean the company has engaged in wrongdoing. At the heart of the dispute is whether cryptocurrencies are securities are not. Robinhood argues crypto assets listed on its platform are not securities. The SEC argues most cryptocurrency tokens are securities and fall under its registration rules.
IPO Stock: Drivers Of Growth
In Q1, Robinhood earnings should benefit from a rebound in equity, options and crypto trading volumes, the company’s own and other data show. Aside from trading revenue, Robinhood is likely to see growth in net interest revenue. Analysts expect online brokers to grow margin loan balances, continuing to benefit from higher-for-longer interest rates. Year to date, Robinhood stock has shot up 40%. Shares have nearly doubled in the past year, up 99.5%, but remain far below their post-IPO high, set in August 2021. The price of bitcoin can be a driver for Robinhood stock, with cryptocurrency moves key for the brokerage’s crypto trading. Bitcoin fell modestly Wednesday around $62,000, pulling back from record highs in March.
Conclusion
As Robinhood prepares to report earnings, the company faces potential challenges from the SEC over its cryptocurrency trading. However, the company’s projected revenue rebound and potential growth drivers present a positive outlook. Investors should keep an eye on these developments to make informed decisions.
