Stock Analysis & Ideas

Robinhood: What do Monthly User Statistics Indicate Ahead of Q4 Earnings?

The financial services company Robinhood Markets (HOOD) will release its fourth-quarter 2021 earnings on January 27.

Given that it’s an online trading platform, the majority of Robinhood’s revenues come from trade-related transactions. As a result, more monthly users equal more trading activity on the platform, which implies more transaction revenues for Robinhood. For Robinhood, transaction-based revenues are fees gained by routing customer orders for stocks, options, or cryptocurrency to other brokers.

In fact, effective user growth remains the key to Robinhood’s success; therefore, using a Website Traffic tool could be critical here. We used TipRanks’ Website Traffic tool to look into Robinhood’s monthly user statistics and to get a better sense of the company’s current state, ahead of the Q4 print.

Robinhood’s Monthly Users

The graph above shows that Robinhood’s website traffic increased in the most recent Q4 quarter, earnings from which have yet to be published. To put things into perspective, total unique visits to Robinhood increased by 18.7% year-over-year to 35.9 million. The increase in visits reflects that Robinhood may be able to deliver good year-over-year top-line results in the Q4 quarter.

However, the data for monthly visitors to Robinhood.com are not particularly encouraging for the month of December. We can observe that, while the company’s projected monthly visitation climbed by 0.7% in November, it fell by 17.7% quarter-over-quarter to 10.5 million users in December.

What does this drop indicate?

The drop in unique visitors in December is expected to have reduced Robinhood’s revenues in the fourth quarter to some extent. Furthermore, Robinhood’s key metrics, ARPU (average revenue per user) and MAU (monthly active users), may have declined in the fourth quarter due to the dip in its monthly user base.

To summarize, the website traffic numbers for Robinhood do not appear to be very impressive for Q4. In addition, the business cautioned during its Q3 earnings conference that seasonal headwinds and lower trading activity might harm the company’s fourth-quarter results. The prediction appears to be coming true.

Analysts’ Forecast

Turning to Wall Street, HOOD stock comes in as a Hold. It has 5 Buy, 6 Hold and 2 Sell ratings by analysts.

The average Robinhood Markets price target of $33.92 represents 158.5% upside potential.

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