Prior to the broader market selloff over the last week, Robinhood Markets HOOD and Coinbase Global COIN were two popular growth stocks that had started to soar this year. Both launched highly anticipated IPO’s in 2021, as security exchange operators that were ahead of the curve in regards to cryptocurrency trading.
Starting to fulfil their expansion expectations, Robinhood’s stock had hit a 52-week high of $66 a share earlier in the month but is down more than 20% from this peak. Meanwhile, Coinbase shares had climbed to over $300 a few weeks ago but have fallen 30% from what was nearly a two-month high.
That said, in the last two years, HOOD and COIN have impressively outperformed the broader indexes with gains of over +400% and +200%, respectively.
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Positive EPS Revisions
Although Robinhood and Coinbase stock have been very susceptible to recent market volatility, the main catalyst to their strong price performances beforehand is still apparent. This is the trend of positive earnings estimate revisions, which suggests their stocks could bounce back when markets stabilize.
Fiscal 2025 and FY26 EPS estimates for Robinhood have continued to trend higher over the last quarter. Plus, FY25 EPS estimates have spiked 28% in the last 30 days from $1.18 to $1.51. More intriguing, over the last month, FY26 EPS estimates have jumped 15% from $1.47 to $1.70.
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As for Coinbase, it's noteworthy that FY25 EPS estimates have soared 110% in the last 30 days from $3.48 to $7.32. This comes as Coinbase crushed its Q4 EPS expectations for FY24 by 74.74% earlier in the month. Bolstering Coinbase’s strengthening outlook is that FY26 EPS estimates have skyrocketed nearly 200% over the last four weeks, from $2.97 to $8.72.
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Reasonable P/E Valuations
Making the trend of positive EPS revisions more reassuring is that HOOD and COIN are starting to trade at reasonable P/E valuations. Reassuringly, COIN now trades at a 29.4X forward earnings multiple compared to a one-year high of 255.3X and a median of 54.2X.
Furthermore, HOOD trades at 32.4X forward earnings which is well below its own one-year high of 89.3X and a slight discount to the median of 41.8X.
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Conclusion & Final Thoughts
Taking advantage of their sales growth, the increased probability of Robinhood and Coinbase is hard to ignore, even amid recent market volatility. Both have triggered a Zacks Rank #1 (Strong Buy) rating thanks to the trend of positive earnings estimate revisions.
Furthermore, COIN and HOOD are starting to look like buy the dip targets given their more reasonable valuations. This also alludes to the notion that the recent pullback in these popular stocks was a healthy correction.
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Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
