Retail trading platform, Robinhood Markets (NASDAQ:HOOD) surprised investors with earnings and revenue beat for the third quarter of Fiscal 2022 results. The company registered both sequential and year-over-year growth in most of its financial metrics.
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What’s more, in Q3, Robinhood increased its revenue while controlling its expenses and met its adjusted EBITDA (earnings before interest tax depreciation and amortization) profit target one quarter ahead of schedule.
On the other hand, monthly active users (MAUs) declined by 1.8 million sequentially to 12.2 million in Q3. Nonetheless, Net Cumulative Funded Accounts grew to 22.9 million, and average revenue per user (ARPU) grew to $63 from $56 in Q2.
Following the news, HOOD shares popped nearly 6.6% in the after-hours trading session yesterday. Vlad Tenev, CEO and Co-Founder of Robinhood Markets, said, “We delivered on top feature requests for customers including advanced charts, options in cash accounts, instant withdrawals, and our self-custody, web3 wallet. In the next week, we are raising the yield on uninvested cash for Gold members – making it one of the best rates in the industry.”
Details of Robinhood Market’s Q3FY22 Results
HOOD posted a diluted loss of $0.20 per share, beating analysts’ estimates of $0.31 per share. Also, the loss was narrower than the prior quarter’s loss of $0.34 per share and significantly better than Q3FY21’s loss of $2.06 per share.
Similarly, total net revenues of $361 million outpaced the consensus of $355.27 million. The figure rose 14% sequentially but declined a minor 1% compared to the same period last year.
Thanks to the consistently increasing interest rates, Robinhood Markets’ Net interest revenues in Q3 leaped 103% year-over-year to $128 million. This gain was offset by a 22% decline in Transaction-based revenue, and a 29% fall in Other revenues compared to Q3FY21.
Nonetheless, all the revenue parameters grew sequentially except for cryptocurrency’s Transaction-based revenue, which fell 12% owing to the volatility and falling prices of the underlying asset.
Is HOOD Stock a Buy?
On TipRanks, HOOD stock currently has a Hold consensus rating, owing to its volatile historical record. This is based on two Buys, four Holds, and three Sell ratings. The average Robinhood Markets price forecast of $12.22 implies 7.2% upside potential to current levels. Meanwhile, the stock has lost 69.2% over the past year vis-à-vis gaining 12.9% in the past six months.
Ending Thoughts
Robinhood Markets has come a long way from the initial regulatory problems and related fines to the meme stock mania that started on its platform. Currently, the company seems to be focusing well on its cost restructuring and measures to increase its user base. Analysts are also not particularly bearish about its long-term prospects. Also, hedge funds display a Positive Signal for HOOD stock. As per TipRanks’ Hedge Fund trading tool, eight hedge funds have increased their cumulative holdings of HOOD stock by 441,700 shares in the last quarter.
