Summary
- JPMorgan assessed that Robinhood's Q3 results were based on a one-off tax benefit.
- It said that Robinhood's cryptocurrency revenue weakness was a major factor in the results' volatility.
- JPMorgan raised Robinhood's price target to $130 but maintained a 'Neutral' investment rating.
JPMorgan said Robinhood (Robinhood)'s third-quarter results were overall decent, but weak revenue in the digital assets (cryptocurrency) segment and a one-off tax benefit were the main factors behind the strong results.
On the 7th (local time), according to CoinDesk, JPMorgan analyzed in a report, "Robinhood's earnings per share (EPS) exceeded market expectations by about 15%, but this was due to the effect of a reduction in the tax rate related to stock-based compensation from the share price rise (about 52%) rather than operating performance." It added, "Robinhood's trading platform profitability is improving, but the cryptocurrency segment still determines the volatility of results."
Robinhood's net cryptocurrency revenue was $268 million, below both JPMorgan's and the market's expectations, and accordingly the stock fell 11% the previous day to close around $127. After this earnings announcement, JPMorgan raised its price target for Robinhood from $122 to $130, while maintaining its investment rating at 'Neutral.'
It continued, "Robinhood's results have many positive factors in the short term, but they are based more on one-off factors than structural growth," adding, "In future quarters, stable revenue generation in the cryptocurrency segment will be key."
Son Min
sonmin@bloomingbit.ioHello I’m Son Min, a journalist at BloomingBit
