Robinhood on Wednesday missed earnings and revenue estimates for the third quarter. Robinhood stock plunged on Thursday to test a key level.
Robinhood Earnings
For Q3, Robinhood swung to earnings of 17 cents per share, vs. a 9-cent loss a year ago but falling short of estimates by a penny. Revenue grew 36% to $637 million, handily missing views for a 41% gain.
Despite an overall miss, the Q3 report marked the fourth quarter in a row of positive earnings for the upstart broker. Analysts now expect EPS of 72 cents for the full year, FactSet shows. That would mark the company's first annual profit and compare with a 61-cent loss in 2023.
On an earnings call Wednesday, Robinhood management tied the earnings miss to an accounting quirk to do with incentives that they said Wall Street analysts had overlooked, Reuters reported.
On Wednesday, Robinhood held to its full-year operating expenses projection offered in August, of $1.85 billion to $1.95 billion. Management says the company is investing in new products, features and international expansion.
Robinhood Stock Sinks
Shares gapped down 16.7% on the stock market today, testing the 50-day moving average. Ahead of the Q3 report, Robinhood stock had ended Wednesday in a profit-taking zone above a September cup-with-handle breakout.
The disruptive online broker had rallied well off August lows. Shares began to recover after Robinhood posted record earnings and revenue for the second quarter of 2024.
Trump Or Harris Contracts
Robinhood continues to push into new avenues for growth, including futures and index options trading. This week, it began to allow users to trade a Kamala Harris or Donald Trump contract as the U.S. presidential election event looms.
Founded in 2013, Robinhood disrupted brokers such as Charles Schwab and Interactive Brokers by offering customers free trades via a slick trading app.
