Robinhood Markets, Inc. (HOOD) operates as an online discount brokerage firm that offers zero-commission trading services for several U.S.-listed securities. The company has net cumulative funded accounts of 22.9 million and 14 million monthly active users.
HOOD became wildly popular during the height of the pandemic among millennial and Gen Z investors. Despite weak fundamentals, several meme stocks were propelled to unsustainable highs backed by social media hype and brought speculators massive and quick gains.
However, HOOD has recently incurred significant losses amid a massive downturn in the crypto market and persistent market volatility. The company reported poor financials for the second quarter ended June 30, 2022. Its net revenues declined 44% year-over-year to $318 million, and its net loss came in at $295 million.
As the market volatility is unlikely to subside anytime soon, it would be wise for investors to disregard any hype and avoid fundamentally weak Robinhood stocks PayPal Holdings, Inc. (PYPL) and Coinbase Global, Inc. (COIN).
PayPal Holdings, Inc. (PYPL)
PYPL enables digital payments and commerce experiences for merchants worldwide as a technology platform. Its brands include PayPal, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, Happy Returns by PayPal, Chargehound, Paidy, and Simility.
In the fiscal 2022 second quarter ended June 30, 2022, PYPL’s non-GAAP operating income declined 21.3% year-over-year to $1.3 billion. The company’s non-GAAP net income also declined 20.8% from the prior-year value to $1.08 billion during the same period. It translated to $0.93 per share on an adjusted basis, down 19.1% year-over-year.
Analysts expect PYPL’s EPS for the third quarter of fiscal 2022 (ending September 2022) to decrease 13.1% year-over-year to $0.96. Also, the company’s EPS for the fiscal year 2022 is also expected to decline 14.6% year-over-year to $3.93.
The stock has slumped 7.1% over the past month and 55% year-to-date to close the last trading session at $87.66.
PYPL’s POWR Ratings are consistent with its weak performance and bleak outlook. It has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PYPL is ranked #41 among 50 stocks in the D-rated Consumer Financial Services industry.
In addition to the above, we have also rated PYPL on six other parameters: Growth, Value, Momentum, Stability, Sentiment, and Quality. Click here to see all ratings for PYPL.
Coinbase Global, Inc. (COIN)
COIN is a fintech company that provides end-to-end financial infrastructure and technology for the global crypto economy. The company offers financial accounts for retail crypto users, a liquid marketplace to institutions for crypto transactions, and technology and services for ecosystem partners.
On September 12, reports emerged that the brother of a former COIN product manager pleaded guilty to a wire fraud conspiracy charge when prosecutors called the first insider trading case involving cryptocurrency.
On June 14, COIN announced an 18% reduction in its workforce by laying off approximately 1,100 employees. It came as volatile crypto markets have lost more than $2 trillion in valuation since 2021, and COIN CEO, Brian Armstrong, warned of a recession and a crypto winter on the horizon.
In the fiscal 2022 second quarter ended June 30, COIN’s total revenue decreased 63.7% year-over-year to $808.33 million. During the same period, the company reported an operating loss of $1.04 billion, compared to an income of $874.73 in the previous-year period.
In addition, COIN’s net loss attributable to common shareholders came in at $1.1 billion and $4.98 per share, compared to a net income of $1.59 billion and $6.42 per share in the previous-year quarter, respectively.
Analysts expect COIN’s revenue for the fiscal ending December 2022 to decrease 56.8% year-over-year to $3.39 billion. Also, the company is expected to report a $6.61 per share loss for the current year. The stock has plunged 15.1% over the past month and 74.9% year-to-date to close the last trading session at $62.94.
It’s no surprise that COIN has an overall rating of F, which translates to Strong Sell in our POWR Ratings system. It also has a grade of F for Growth, Value, Stability, and Sentiment.
It is ranked penultimate among 149 stocks in the F-rated Software – Application industry. To see the additional POWR Ratings for Momentum and Quality for COIN, click here.
PYPL shares were trading at $86.05 per share on Friday afternoon, down $1.61 (-1.84%). Year-to-date, PYPL has declined -54.37%, versus a -22.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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