Robinhood inventory surges after attaining constructive EBITDA 1 / 4 early (NASDAQ:HOOD)

Robinhood Markets (NASDAQ:HOOD) inventory climbed 9.7% in Thursday afternoon buying and selling after stock-trading app’s headcount reductions in Q2 lowered its prices in Q3, serving to it to realize constructive adjusted EBITDA progress 1 / 4 forward of expectations.

Web curiosity income additionally helped EBITDA, KeyBanc analyst Josh Beck mentioned in a be aware to purchasers. “Absolutely paid securities lending rose to $4M as money sweep rose to $8M, each comparatively new contributions to the web curiosity line, which ~doubled Y/Y,” he mentioned.

Q3 GAAP EPS of -$0.20 beat the -$0.31 consensus and narrowed from -$0.34 in Q2.

“Total, we walked away impressed with the corporate’s price self-discipline, whereas additionally remaining centered on new merchandise and the construct out of its platform,” wrote Goldman Sachs analyst Will Nance. “We expect HOOD’s outcomes make an excellent case for his or her potential to spend money on the platform with a a lot leaner price construction, regardless of a weak buyer acquisition surroundings which we view as a differentiator relative to different neobanks within the fintech house.”

Wolfe Analysis analyst Steven Chubak mentioned, “Issues are beginning to click on” at Robinhood (HOOD). Along with the upper web curiosity income and decrease bills, he pointed to raised charge sensitivity and favorable steering on stock-based compensation dilution.

“Increased dilution from share-based comp was a key tenet of the bear case which administration has successfully taken off the desk; this, mixed with constructive steering, ought to yield upside to consensus/shares,” Chubak wrote. He elevated his truthful worth vary of the inventory to $6-$19 from $6-$12.

Goldman Sachs’s Nance elevated his value goal to $13 from $11.50, and KeyBanc’s Beck lifted his value goal to $13 from $11.

Earlier than Thursday’s inventory bounce, remember that HOOD shares had dropped 67% previously 12 months. The inventory closed on Thursday at $11.40, lower than a 3rd of its $38 IPO value over a 12 months in the past.

Robinhood (HOOD) CEO Vlad Tenev and CFO Jason Warnick mentioned the corporate’s cost-cutting efforts on the corporate’s earnings name Wednesday night.