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By Senad Karaahmetovic
Atlantic Equities analyst John Heagerty downgraded Robinhood Markets (NASDAQ:) to Underweight from Impartial as he’s “more and more involved concerning the deteriorating income developments” dealing with the corporate.
Heagerty’s transfer comes as Robinhood faces a fast decline in month-to-month lively customers (MAUs), in addition to falling common income per consumer (ARPU).
“With prospects returning to pre-pandemic behavioural developments and a possible recession forward, consumer engagement appears more likely to decline additional. As well as, the decline in fairness markets is often a prelude to decrease retail buying and selling volumes and the regulatory menace to PFOF revenues is substantial. Lastly, plummeting crypto valuations could have a direct impression on each volumes and order worth,” Heagerty instructed purchasers in a observe.
These considerations have prompted the analyst to chop revenues by 10% in 2022 and by 25% in 2023 with the corporate unlikely to change into worthwhile earlier than 2025.
“The prolonged period to reaching EBITDA profitability considerably lowers our DCF-based valuation. As well as, our revenue-based and NTA-based valuations are significantly decrease than beforehand with draw back danger to our income forecasts,” he added.
The value goal goes to $5.00, signaling round 30% draw back from present market ranges.
Robinhood shares are down almost 3% in pre-market Wednesday.
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