Wall Street bank JPMorgan ( JPM ) called Robinhood’s ( HOOD ) third-quarter results solid but lower quality, as weaker crypto revenue and tax benefits caused a big chunk of earnings to take a hit.
The bank said the hit to around 15% earnings per share (EPS) was mainly due to a lower tax rate attached to stock-based compensation from the 52% increase in the stock price, in a report published on Thursday.
Analysts led by Kenneth Worthington expect the trading platform’s margins to continue to improve and raised their price target on the stock to $130 from $122, while reiterating their neutral rating on the stock.
Shares fell 11% yesterday to close around $127.
Crypto was the headliner, with net revenue of $268 million missing both Street and JPMorgan estimates, sending shares lower despite strong volume growth.
The bank said Robinhood’s crypto fee rate fell to 67 basis points from an expected 68 as management continues to adjust prices.
Prediction markets offset some weakness, although analysts cautioned that the segment depends on a small group of active traders.
Read more: Wall Street Divided on Coinbase’s Path Forward After Q3 Earnings Beat
