Robinhood shares have been on a wild ride since their debut.
This week, the stock is down about 3%, trading at around $48 per share.
The trading platform already provided guidance on user growth and financials for the period ahead of its report, so those figures are unlikely to move the stock.
Revenue projections and funded accounts
In the first quarter, revenue increased 309 percent to $522 million, up from $128 million the previous year.
According to an average of three firms polled by Refinitiv, Wall Street analysts expect revenue of $521.8 million in the second quarter.
According to Refinitiv, analysts expect earnings per share of 8 cents in the second quarter, despite the fact that only two have been polled. On Tuesday, the consensus was for a loss of 15 cents per share, with three estimates included. Because of the uncertainty surrounding share count and analyst count, analysts did not compare results to EPS estimates.
“In comparison to the brokerage peer group, which trades at a significant discount to the disruptive fintech peer group, Robinhood screens at the top end, but on a revenue growth adjusted basis, it screens towards the bottom end,” Redburn analyst Charles Bendit writes. “We anticipate that Robinhood will increasingly monetize its user base.” HOOD was given a buy rating by Redburn ahead of its earnings report.
Trading activity in the future
Any guidance that indicates a slowdown in trading and thus revenue for the free-trading pioneer could move the stock. Last month, Robinhood warned of a possible slowdown in trading revenue and new clients as the retail investing boom begins to slow.
In a regulatory filing, the company stated that third-quarter revenue would be lower than the second quarter “as a result of decreased levels of trading activity relative to the record highs in trading activity, particularly in cryptocurrencies.” Robinhood also anticipates a slower rate of new client growth in the third quarter.
Investors will also be looking for information on share sales from existing shareholders who bailed out Robinhood during the GameStop trading frenzy.
Is Robinhood like dogecoin?
“Robinhood’s growth within crypto is nothing short of remarkable, but the outsized contribution from dogecoin simply cannot be overlooked,” Wolfe’s Steven Chubak wrote in an investor note on Wednesday.
The firm’s price target for the newly listed stock has been reduced to $41 per share. On Thursday, Robinhood shares were down more than 9%, trading around $45.
Wolfe noted that dogecoin’s share of revenue increased significantly from 6% in the first quarter to 26% in the second quarter. However, trading volumes for dogecoin fell by about 78 percent in the third quarter and are now trailing first-quarter levels.
“We believe the third-quarter slowdown could be much more severe than many investors anticipated,” he added. “This may not deter longer-term fintech investors, but it may give financial investors more confidence in the short thesis.”
Dogecoin was created in 2013 and is based on the same-year internet meme doge. With the encouragement of Tesla CEO Elon Musk, it regained popularity among Reddit-trader types in 2021. In comparison to bitcoin and ether, it has very little to show in terms of fundamentals.
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“When you peel back the onion of Robinhood, it appears to be a dogecoin gateway,” Cramer said on “Squawk on the Street” on Thursday.
Robinhood’s stock fell more than 8% on Thursday morning. While the newly public brokerage more than doubled its quarterly revenue to $565 million, the company revealed that crypto trading accounted for more than 51% of its transactional revenue. Furthermore, dogecoin, a meme-inspired token, accounted for 62 percent of cryptocurrency revenue in the second quarter.
“The numbers about how much is dogecoin are quite surprising, and it’s very clear to me that this is a company that has become a crypto company,” the “Mad Money” host said.
Robinhood has even warned its customers about the financial consequences of trading dogecoin.
In addition, the free-trading pioneer warned of a seasonal slowdown in the current quarter.
“They’re talking about seasonality, and how seasonality will be bad in September,” Cramer explained. “That’s when you’re killing it in business. I’m not sure what kind of calendar they’re on because the seasonality is fantastic in September.”