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Robinhood Markets, Inc. (NASDAQ:HOOD) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. It definitely looks like a negative result overall with revenues falling 16% short of analyst estimates at US$299m. Statutory losses were US$0.45 per share, 27% bigger than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Robinhood Markets
Taking into account the latest results, the most recent consensus for Robinhood Markets from 13 analysts is for revenues of US$1.67b in 2022 which, if met, would be a credible 4.9% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 56% to US$1.33. Before this earnings announcement, the analysts had been modelling revenues of US$1.84b and losses of US$1.23 per share in 2022. Overall it looks as though the analysts are negative in this update. Although sales forecasts held steady, the consensus also made a moderate increase in to its losses per share forecasts.
The average price target fell 7.2% to US$15.39, implicitly signalling that lower earnings per share are a leading indicator for Robinhood Markets' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Robinhood Markets analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$10.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Robinhood Markets' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 6.5% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.0% annually. Even after the forecast slowdown in growth, it seems obvious that Robinhood Markets is also expected to grow faster than the wider industry.