JPMorgan Chase: Robinhood's Q3 results were solid but lacked quality due to lower-than-expected cryptocurrency revenue.

PANews reported on November 7th, citing CoinDesk, that Wall Street bank JPMorgan Chase believes Robinhood's third-quarter results were solid but lacked quality. Weak cryptocurrency revenue and tax benefits led to better-than-expected earnings, with earnings per share exceeding 15%, attributed to a lower tax rate related to stock option compensation resulting from a 52% increase in share price. JPMorgan analysts expect the platform's profit margins to continue improving, raising their price target from $122 to $130 and reiterating a neutral rating. The stock plunged 11% yesterday, closing at approximately $127.

The cryptocurrency business was a major drag, with net revenue of $268 million falling short of expectations, and the stock price declining despite a significant increase in trading volume. Robinhood's cryptocurrency expense ratio decreased to 67 basis points from the expected 68 basis points as management adjusted pricing. Market expectations partially offset the weakness, but analysts cautioned that the business relies on a small number of active traders.