What Happened?

Shares of financial services company Robinhood (NASDAQ:HOOD) fell 16.3% in the morning session after the company reported underwhelming third-quarter earnings that missed Wall Street's revenue, users, EBITDA, and EPS expectations. Notably, sales declined quarter on quarter, suggesting that the momentum from retail traders might not be as strong as in recent times. Overall, this was a weaker quarter.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Robinhood? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Robinhood’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Robinhood and indicate this news significantly impacted the market’s perception of the business. 

The previous big move we wrote about was 23 days ago when the stock gained 8.1% on the news that reports that Dan Gallagher, the company's Chief Legal Officer is a top candidate to head the SEC (Securities and Exchange Commission) if former President Donald Trump wins in the November 2024 election. Gallagher's experience could come in handy as the SEC enhances its oversight into the crypto space. 

Separately, the company announced its first-ever Investor Day event to be held on December 4, 2024. These sessions often provide a platform for management to communicate the company's strategies and vision more effectively with investors. In some cases, it also serves as an avenue to launch new products and share innovative ideas. 

Given the strong interest from retail investors in the company's fintech platform (including its stock trading app), the stock's reaction suggests optimism around the event. Notably, the company plans to share its vision for the next 10+ years, including plans to drive customer and shareholder value.

Robinhood is up 89.4% since the beginning of the year, but at $23.46 per share, it is still trading 16.8% below its 52-week high of $28.21 from October 2024. Investors who bought $1,000 worth of Robinhood’s shares at the IPO in July 2021 would now be looking at an investment worth $672.89.

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