Robinhood tanks another 15%: has it bottomed yet?

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Robinhood Markets Inc (NASDAQ: HOOD) tanked another 15% after-hours on Thursday after posting disappointing results for its fiscal fourth quarter. At under $10 a share, the stock is now down about 75% from its IPO price in July 2021.

Mizuho analyst has a buy rating on Robinhood

On CNBC’s “Closing Bell”, Mizuho’s Dan Dolev agreed that things looked scary even on a quarter-over-quarter basis but said signs of stability were starting to materialise.

If you peel the onion and look beneath the surface, you’ll see signs of stabilising ARPU, stabilising users. When you miss consensus, the stock goes down, but I think this might be the bottom. In the second half of the year with stabilising trends, this could be a very interesting story.

Dolev has a “buy” rating on HOOD with a price target of $20 that represents an about 50% upside from here.

Robinhood’s Q4 financial performance

Robinhood lost $423 million in Q4 (49 cents a share) versus $13 million (2 cents a share) it “earned” in the same quarter last year. Its sales jumped 14% in the recent quarter to $363 million. According to FactSet, experts had forecast a much narrower 35 cents of per-share loss on a higher $376 million in sales.

Both assets under custody and MAUs were up from last year, but ARPU tanked 39% on lower trading volume in equities and options. An increase in trading volume per user in cryptocurrencies helped offset it but only partially.

Guidance for the future

ARPU for the full financial year was also down 5.0%. For Q1, Robinhood forecasts under $340 million in sales, assuming “incremental improvement in trading volumes versus what we’ve seen so far. FactSet consensus was for $444 million in Q1 sales.

The financial services company expects 15% to 20% annualised growth in operating expenses this quarter. Earlier in January, billionaire investor Cathie Wood loaded up on HOOD amidst the sell-off.

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