Robinhood (HOOD) shares were up more than 7% by mid-session ahead of the trading platform's first earnings report since becoming a public company. The results are highly anticipated given its retail user base and the stock's wild ride following its IPO.
This is what the Street is expecting, based on estimates compiled by Bloomberg.
Adjusted earnings (loss) per share: -.26 cents
Revenue: $559.5 million
In line with the company's "democratize finance for all" theme, the trading platform has allowed shareholders to submit questions ahead of the company's earnings call. Questions with the most 'upvotes' will be answered by management.
Robinhood has been a key player in the retail trading boom involving GameStop (GME) and other stocks over the past this year.
The company itself recently became associated with a 'meme stock' when its shares soared 24% one day, and touched an all time intraday high of $85 in a retail-led rally the next day.
The company only has three analyst ratings so far, with 2 Buys and 1 Hold. "It's still hard to know what the right long term value of this company should be," strategist Matt Maley of Miller Tabak + Co told Yahoo Finance. "I'm one who thinks the longer term players should build their position over time because the stock will be very volatile,"
On August 5th the stock tanked 27% after the company announced some stockholders would be cashing out up to 97.8 million shares. Robinhood later clarified those sales were on hold until receiving SEC approval.
Robinhood went public on the Nasdaq (^IXIC) on July 28th with an IPO price of $38/share. The stock closed down 8% on its first day of trading. In an unusual move, the company had allocated about 35% of its shares to retail investors for its IPO.
Wall Street will be paying attention to revenue generated from payments for order flow and how much trading volume took place in the second quarter. Robinhood funnels users' trades to market makers which pay a fee to execute those trades.
Revenue from payment for order flow accounted for about 80% of the company's revenue in the first quarter. Analysts expect to see a rise in crypto trading during the second quarter, while stock trading may have taken a breather compared to the first quarter of 2021.
"I'm not worried if the second quarter was slower. That's well known. But if they're telling us that things are picking up in August, that should bode well for the third quarter and also the fourth quarter as well," said Maley.
HOOD recently rallied following a headline that Congress would be shelving a ban on payments for order flow. Such a prohibition would have seriously impacted the way Robinhood generates revenue.
Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre
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August 19, 2021 at 01:40AM
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