Robinhood Stock Drops Despite Mizuho's $130 Price Target As Crypto Revenue Falls 55%

Robinhood partnered with Ripple to expand institutional crypto services, and Robinhood Chain is now offering RLUSD from Ripple.

• Mizuho called Robinhood’s post-earnings drop a buying opportunity and reiterated its ‘Outperform’ rating.
• With transaction volume down 38% in September and trading slowing in October, Mizuho said the selloff was driven by prediction markets growing more slowly than expected.
• Crypto revenue dropped 55% to $120 million in the third quarter, while Robinhood's overall revenue rose 12% to a record $1.42 billion.

Robinhood Markets (HOOD) shares dipped in pre-market trading on Wednesday, despite Mizuho reportedly calling the post-earnings pullback a buying opportunity.

Mizuho reiterated its 'Outperform' rating and $130 price target on the stock, according to a Investing.com report. The target implies about 37.5% upside from the stock's Tuesday close of $94.

HOOD stock was down over 8% in pre-market trade. On Stocktwits, HOOD was one of the top trending tickers at the time of writing. Retail sentiment around HOOD improved to 'bullish' from 'bearish', while chatter rose to 'high' from 'normal' levels over the past day.

Mizuho said the selloff was driven by two factors, according to an Investing.com report. Robinhood's third-quarter earnings report showed September saw slower-than-expected growth in prediction markets, with transaction volume down 38%. Trading trends also eased in October. 

Mizuho, however, viewed the dip as an opportunity for investors, citing Robinhood's $600 billion revenue market.

Mizuho Backs Robinhood's Diversified Prediction Markets Strategy

Although Robinhood's revenue climbed 12% to a record $1.42 billion, revenue from crypto products fell 55% to $120 million as digital-asset trading cooled, amid broader crypto market slump. Robinhood said diluted earnings per share fell 16% to $0.51, and adjusted earnings per share declined 3% to $0.60. Revenue from event contracts, the bets traded on Robinhood's prediction markets hub, more than doubled to $173 million, the company said.

Mizuho also supported the way Robinhood is building out its prediction markets business. The firm said the company was not relying solely on sports contracts. That spreads risk if the political or regulatory environment changes. Mizuho said it's like Robinhood's approach to crypto, where the company is involved in the market but doesn't rely on it too heavily.

Net deposits in October "already surpassed $13 billion month-to-date," said Shiv Verma, Chief Financial Officer of Robinhood. He said that included $6 billion from the Dell family's contribution to Trump Accounts. The total is nearly half from that single contribution.

Robinhood Partners With Ripple on RLUSD

As retail trading slows down, Robinhood is also putting more weight on stablecoins and institutional crypto. In a joint statement, the company and Ripple (XRP) said that they had formed a broad partnership on Tuesday. 

Ripple USD (RLUSD), a dollar-backed stablecoin, is now available on Robinhood Chain and Bitstamp, an exchange Robinhood bought last year. Late this year, it will be added to the main Robinhood app. 

Banks will be able to settle trades on Bitstamp with RLUSD on the XRP Ledger through Robinhood. It will also use Ripple's treasury tools to manage its cash and treasury operations. The firm's main brokerage arm, Ripple Prime, already lends and finances about 20 digital assets through Bitstamp, the two companies said.

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