Robinhood Markets ($HOOD) is set to reveal its Q4 earnings on Wednesday. Investors will be keeping a close eye on the company's 2023 outlook, as analysts have already lowered their earnings projections for Q4 by 72%. Despite this, the stock has risen 30% YTD and Robinhood will need to deliver strong results to maintain its upward momentum.
But alternative data suggests a challenging situation for Robinhood, with low employee morale and a business outlook score of only 36 out of 100. Additionally, the company has seen a 60% drop in webpage traffic and a 50% drop in app downloads in the last 18 months. This can indicate that Robinhood is struggling to attract new customers.
Combine this with a surprising decline in Instagram followers, and there are too many indicators pointing to a decrease in customer sentiment.
To gauge the company's performance, investors will be watching monthly active users, which dropped to 12.2 million in Q3, a decrease of almost 50% from Q2 2021. Analysts predict a further 28% drop in Q4.
The current upswing in the market could mean that business is slowly coming back to Robinhood, so for long-term holders, the future might be brighter. But the decrease in webpage traffic, business outlook, MAU and Instagram followers could indicate that the company is currently struggling. Add a dire threat on the regulatory front to overhaul the handling of small investors, it makes sense for investors to exercise caution when considering investing in Robinhood, given short-term downside might be expected.
$HOOD earnings will be announced after hours today.
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