Wall Street bank JPMorgan (JPM) called Robinhood’s (HOOD) third-quarter results strong but substandard, as weak crypto revenue and tax benefits dragged down much of the profit.
The bank said the roughly 15% rise in earnings per share (EPS) was mainly due to a lower tax rate linked to stock-based compensation compared to the 52% rise in the stock price, in a report released on Thursday.
Analysts led by Kenneth Worthington expect the trading platform’s margins to continue to improve and raised their price target on the stock from $122 to $130, while reiterating their neutral rating on the stock.
Shares fell 11% yesterday, closing around $127.
Crypto was the biggest drag, with net income of $268 million missing both Street and JPMorgan estimates, sending shares lower despite strong volume growth.
The bank said Robinhood’s crypto fee rate fell to 67 basis points from an expected 68, as management continues to adjust prices.
Prediction markets have offset some weakness, although analysts have warned that the segment depends on a small group of active traders.
Read more: Wall Street divided on path forward for Coinbase after third-quarter earnings beat
