HOOD Stock Falls Pre-Market After Price Target Cuts On Q1 Miss – Bernstein Says Shares Already Bottomed

• Barclays trimmed its price target on HOOD’s stock to $82 from $89, and kept an ‘Overweight’ rating on the shares, according to TheFly. 
• Keefe Bruyette lowered its target to $65 from $75 and kept a ‘Market Perform’ rating on the shares.
• Bernstein maintained its price target of $130, implying an upside of 58% from Tuesday’s close.

Shares of Robinhood (HOOD) dropped more than 10% in early morning trade on Wednesday after Wall Street began to cut its price targets on HOOD’s stock following its first-quarter earnings miss. 

Barclays trimmed its price target on HOOD’s stock to $82 from $89, and kept an ‘Overweight’ rating on the shares, according to TheFly. Keefe Bruyette lowered its target to $65 from $75 and kept a ‘Market Perform’ rating on the shares. Bernstein, on the other hand, did not change its price target of $130, which implies an upside of 58% from Tuesday’s close, and said Robinhood’s shares already bottomed in the first quarter. 

HOOD’s stock fell as much as 11% in pre-market trade and was among the top trending tickers on Stocktwits at the time of writing. The shares were on track to wipe out their monthly gains for April, which were 15% in the green as of Tuesday’s close.

Why Is HOOD’s Stock Down Today?

HOOD’s stock took a tumble after the company reported adjusted earnings of $0.47 per share for the first quarter (Q1) after market close on Tuesday, missing Wall Street’s estimate of $0.43, according to Koyfin data. Revenue came in at $1.07 billion, also below the consensus estimate of $1.13 billion. 

Barclays said it trimmed its price target due to the company's Q1 revenue missing across the board, which more than offset its slightly lower spending. However, it also noted that Robinhood’s April trends look better, with options and crypto seeing more “fee rate compression.” 

According to Bernstein analyst Gautam Chhugani, the weak Q1 numbers were already factored into the share price. He said that while crypto revenue fell to $134 million, it accounted for just 13% of total revenue in Q1, down from 17% in the previous quarter. 

Beyond crypto revenue, Bernstein noted that Robinhood’s margin book reached a record $17.0 billion, a 93% increase from the prior year. It echoed Barclays’ assessment that April activity showed equity and options volumes tracking toward the strongest month of the year, while prediction markets were pacing toward approximately $3 billion in contracts.

Bernstein added Robinhood Gold subscribers grew 36% year-over-year to 4.34 million, representing a 16% adoption rate among the platform's 27.4 million funded accounts.

How Is Retail Feeling About HOOD’s Stock?

Retail sentiment on Stocktwits around Robinhood rose to ‘bullish’ from ‘neutral’ over the past day, and chatter increased to ‘extremely high’ from ‘normal’ levels. 

Many retail traders on Stocktwits also felt the market had overreacted to the dip in Robinhood's crypto revenue.

Robinhood CEO Vlad Tenev said during the earnings call that he wants the company to move away from talking about Bitcoin’s price and towards crypto infrastructure. “That's why we care so much about tokenization… We're at the very beginning of what's going to be a tokenization super cycle,” he said.

He added that tokenization will have a “starring role” in the crypto event the company has scheduled for July.

HOOD’s stock has fallen nearly 20% this year, but gained more than 60% in the last 12 months. 

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