On Wednesday, Robinhood Markets Inc. (NASDAQ:HOOD) shares plunged more than 9% after announcing its fiscal Q3 results. The company reported its most recent quarterly results Tuesday after markets closed, missing analyst expectations on revenue and earnings. It also issues disappointing FQ4 revenue guidance, well below Street estimates.
The company posted FQ3 non-GAAP EPS of -$2.06 compared to the consensus for analyst estimates of -$0.71. On the other hand, revenue for the quarter grew by more than 35% from the same period a year ago to $365million, still missing the average for analyst expectations by $72.55 million.
Robinhood’s FQ4 revenue guidance of about $325 million reflects a significant sequential decline from Q3. In addition, it is also substantially below the average Street forecast of $489.21 million.
Is Robinhood a growth stock?
From an investment perspective, Robinhood shares trade at a steep price-sales ratio of about 19.23, making it less attractive to value investors. However, analysts are optimistic about its growth potential, predicting earnings to rise by 102.70% this year before increasing by 98.60% next year.
Therefore, although value investors may opt for alternatives in the market, the stock could gain the attention of growth investors.
Source – TradingView
Technically, Robinhood shares seem to have recently plummeted to complete a downward breakout from a sideways channel formation. As a result, the stock has fallen closer to the oversold conditions of the 14-day RSI creating an opportunity for a rebound.
However, given its disappointing FQ3 results, the current bearish bias could continue for the foreseeable future. Therefore investors could target extended declines at about $33.27, while $42.14 and $46.17 are crucial resistance levels.
A good long-term buy?
In summary, although Robinhood shares seem to have recently plummeted closer to oversold conditions, the stock still seems to be under significant bearish pressure.
Nonetheless, given its exciting growth prospects, its long-term outlook could be compelling to investors willing to overlook short-term turbulence.
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