Robinhood’s ( HOOD ) plunge of nearly 12% since its big earnings miss has been shrugged off by some big investors and Wall Street analysts.
The popular trading platform missed its first-quarter earnings and revenue estimates on April 28, primarily due to weaker crypto trading activity. The market punished the stock, but Cathie Wood’s Ark Invest saw it as an opportunity and bought about $39.7 million worth of shares the next day, signaling confidence in the trading platform’s future. Robinhood remains a meaningful position across Ark’s portfolios, accounting for about 3% and among the top holdings in all three funds.
The opposite move appears to have come at the same time as Wall Street analysts, who agreed the miss was just a blip for the company, and data from early April point to improved momentum. They added that equity and options trading volume is headed for some of the strongest levels this year, offering a potential counterweight to continued softness in crypto.
Cantor Fitzgerald, which reiterated its ‘Overweight’ rating and $110 price target, said recent activity suggests stabilization. “Preliminary stock/options turnover in April is tracking towards the highest monthly level this year,” the firm wrote, adding that the earnings miss was more tied to market conditions than core business issues.
Another firm, Compass Point, echoed this view and maintained a ‘Buy’ rating while lowering its price target slightly to $107. The firm said the market reaction looks “backward-looking” given expectations of a stronger second quarter.
While both brokers are bullish on Robinhood’s outlook, some analysts cautioned that risks remain, particularly in crypto trading, which are likely to continue to weigh on results in the near term amid lower volumes and price pressures across the sector.
Investment bank Keefe, Bruyette & Woods ( KBW ), which already had the lowest price target on the stock, according to FactSet data, cut it further. The firm’s analysts, who rate the stock a ‘Hold’, warned that falling transaction fees could continue and cut its target to $65 from $75.
“Capture rates [are] short across the board,” the firm’s analysts said, noting that both crypto and option rate rates have continued to decline into the second quarter. This trend has led to lower long-term forecasts, with KBW trimming earnings estimates through 2028.
That concern didn’t seem to deter one of the top bullish analysts. Bernstein’s analysts, who maintained their ‘Outperform’ rating and a $130 price target, pointed to signs that crypto activity may stabilize, as April has not seen further declines in prices, while stocks and options remain strong.
Beyond trading, bullish investors are now turning their attention to new revenue streams.
Prediction markets are emerging as a key area, with companies highlighting growth in event-based contracts and upcoming catalysts such as product launches and global events. Robinhood’s planned prediction market platform, Rothera, is viewed as a potential driver of future revenue and margin expansion, Cantor said.
For now, the outlook depends on whether recent gains in trading activity can continue. If they do, Robinhood could return to growth sooner than expected. If not, the pressure on transaction revenue may continue into the second half of the year.
The stock rose about 3% Thursday, but is down about 37% this year. One of its crypto peers that tends to trade partially in tandem, Coinbase (COIN), rose about 3% on the day and is down about 19% year-to-date.
Read more: Why Cantor Fitzgerald thinks Robinhood and Coinbase are the best ways to play the predictable market boom
