Robinhood Markets shares advanced 5.7% to $87.51 during Monday's trading session following an analyst upgrade from Wolfe Research. The firm raised its rating on the online brokerage to Outperform from Peerperform and established a $125 price target, suggesting significant upside potential from current levels.
Earnings Preview and Analyst Rationale
The upgrade arrives just one day before Robinhood is scheduled to report its quarterly financial results. Wolfe Research analyst Steven Chubak indicated the firm aims to capitalize on recent market weakness and deteriorating sentiment surrounding digital assets. The analyst highlighted what he described as a durable improvement in the company's earnings power and pointed to growing volumes in prediction markets as a potential buffer should cryptocurrency trading conditions remain challenging.
Bitcoin, a key asset for Robinhood's crypto trading segment, declined approximately 2% on Monday. Wall Street consensus, according to TipRanks data, anticipates earnings per share of $0.63 on revenue of $1.35 billion. Options market activity implies traders are positioning for a potential 12% stock move following the earnings release.
Diverging Analyst Views and Regulatory Landscape
Not all analysts share Wolfe's optimistic outlook. Truist Securities' David Smith reduced his price target on Robinhood to $130 from $155, though he maintained a Buy rating, attributing the stock's recent weakness to softer crypto prices rather than fundamental deterioration.
Robinhood's expansion into event contracts, which offer payouts based on specific outcomes like sports results, faces regulatory uncertainty. A Massachusetts judge recently ordered prediction-market operator Kalshi to halt sports-event contracts in the state within 30 days unless it obtains a gaming license, underscoring legal risks in the emerging sector.
Investors will scrutinize Tuesday's report for details on options and crypto trading volumes, customer engagement trends, and net interest income from client cash balances. The company's earnings call, scheduled for 5 p.m. ET Tuesday, will feature CEO Vlad Tenev and incoming CFO Shiv Verma.
