Is Robinhood Stock Still a Buy After Its Q2 Earnings Beat?

Robinhood Markets (HOOD) stock is higher in Thursday's session after the online brokerage platform reported record strong second-quarter results, beating expectations on both the top and bottom lines.

In the three months ended June 30, Robinhood said its revenue increased 40.3% year-over-year to $682 million, driven by a 69.4% jump in transaction-based revenues to $327 million. This included a 161% increase in cryptocurrency revenue to $81 million. 

HOOD's profitability also improved, with the company reporting earnings per share (EPS) of 21 cents compared with 3 cents in the year-ago period.

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"This quarter, we kept up the pace with rapid product launches and a relentless drive to provide top value for our customers," said Robinhood CEO Vlad Tenev in a statement. "With Robinhood Gold [the company's paid subscription service] reaching 2 million subscribers, we're witnessing the flywheel accelerate."

The trading platform's results handily topped analysts' expectations. Wall Street was anticipating revenue of $643.3 million and earnings of 15 cents per share, according to Reuters.

"I'm encouraged by the progress we're making as a business," said Robinhood Chief Financial Officer Jason Warnick in a statement. "In Q2, we set new quarterly records for revenues and earnings per share as we continue to focus on delivering another year of profitable growth."

Is Robinhood stock a buy, sell or hold?

Robinhood has also shown tremendous growth on the price charts, with shares up nearly 40% for the year to date. And Wall Street is bullish that the financial stock has more room to run. 

According to S&P Global Market Intelligence, the average analyst target price for HOOD stock is $22.91, representing implied upside of more than 30% to current levels. Additionally, the consensus recommendation is a Buy.

Speaking for the bulls is Mizuho Securities analyst Dan Dolev, who has an Outperform (Buy) rating on Robinhood. "There was a lot to like about HOOD's Q2 including a record $13 billion net deposits," Dolev says, adding that the momentum has continued in July and August. 

"In our view, despite already strong momentum, HOOD is still in its early stages of disrupting the Brokerage industry and has plenty of runway from here," he notes.

Separately, Needham analyst John Todaro says that "HOOD is doing everything right in our view from a cost discipline and product initiative standpoint, and we are excited about the Bitstamp and Pluto Capital acquisitions." However, Todara maintained a Hold rating after earnings amid a cautious near-term "outlook for retail investor appetite."

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