HOOD drops 17% in two days, down 37% year-to-date: Can Robinhood rebound 68% amid crypto business drag?

February 13 News, Robinhood Markets’ stock price declined nearly 17% within two trading days after releasing its Q4 earnings on February 10, due to a combination of weak earnings and declining crypto sentiment. Year-to-date, the stock has retreated by 37%. The earnings report showed a earnings per share of $0.66, slightly above expectations, but revenue of $1.28 billion fell short of Wall Street estimates, primarily due to a sharp drop in cryptocurrency trading income.

Data indicates that cryptocurrency-related revenue for the quarter plummeted 38% year-over-year to $221 million, with trading activity significantly weakening. Market concerns suggest that this segment may struggle to recover in the short term, becoming a key factor pressuring the stock price.

Several institutions have subsequently lowered their target prices but maintained their ratings. Truist Financial’s David Smith reduced the target price from $130 to $120, still maintaining a “Buy” rating; Needham’s John Todaro lowered his target from $135 to $100, citing the forecast market as one of the few bright spots; Piper Sandler’s Patrick Moley adjusted the target from $155 to $135, noting that if volatility can be endured, the company remains an important long-term retail trading growth target.

Chief Financial Officer Shiv Verma stated that the market’s overemphasis on the crypto segment is not comprehensive; last year, this business accounted for only about 18% of total revenue, with over 80% coming from stocks, options, and other financial services. He emphasized that the company’s strategy focuses on active traders, improving user asset retention, and accelerating globalization and institutionalization.

Regarding growth catalysts, management is optimistic about the forecast market, real-world asset tokenization, and the deployment of AI tools. The acquisition of TradePMR is also seen as an important step in attracting Millennials and Generation Z. Bernstein’s Gautam Chhugani believes that the current pullback is more of a phase adjustment, with the $60 to $75 range offering attractive allocation opportunities.

In the context of subdued crypto sentiment, HOOD still faces short-term volatility, but the long-term growth narrative has not been completely negated.