Robinhood Earnings After The Closing Bell – What To Expect After Huge Run

Financial platform Robinhood Markets (NASDAQ: HOOD) is set to release its third-quarter financial results after today's closing bell. The upcoming earnings report is highly anticipated, as Wall Street analysts forecast a significant year-over-year improvement in the company's performance, and the company has a recent history of delivering.

The Robinhood stock price has seen a wave of bullish sentiment, with gains over the last month of 19.68% bringing the cumulative 12 month performance to a mightily impressive 208.70%. Off the back of such a run, it is no surprise that HOOD is trading up at multi-year highs, but can this growth rate be sustained?

Analysts expect Robinhood to report earnings per share of $0.26 for the third quarter, a big jump from the $0.11 reported in the same quarter of the previous year. Such a turnaround would indicate strong growth and potential profitability for the company, which has been scrutinized in the past for its revenue model and regulatory challenges.

Revenue is also expected to rise impressively. Consensus estimates on the street suggest Robinhood could see its revenue reach $658.2 million for the quarter, marking a substantial increase compared to the prior year's figure of $467 million. This is a key metric for investors, given the company's recent expansion efforts and initiatives to diversify its income streams, including to that of political derivatives.

Optimism is palpable among the bulls who are confident about Robinhood's future following the platform's addition of index options and futures. They predict these new offerings will generate increased client activity, potentially leading Robinhood to a positive GAAP profit in FY24.

However, caution is also present in the market. Bears highlight concerns about the long-term sustainability of Robinhood's growth, specifically mentioning the potentially adverse impact of anticipated interest rate cuts in 2024 on the company’s net interest income.

The previous three reports have all been positive for Robinhood, with significant beats on top and bottom lines contributing to the bullish wave of sentiment that has in turn pushed the stock higher. The performance is undoubtedly impressive, but a word of caution leading in to earnings in that we have seen some companies deliver beats this earnings season, only to be beaten down.

An element of markets pricing a big beat into the stock after a big run up needs to factored into your analysis, with SoFi yesterday falling 6.4% despite delivering an 8% beat on revenue, and more than 17% on EPS.

As the market awaits the release of Robinhood's Q3 financials, the company's diverse set of strategies and the evolving financial landscape will be key determinants of whether it can continue its upward trajectory or if it will need to navigate through more challenges ahead.