Robinhood Markets Inc. (HOOD) shares plummeted 5% in Friday's trading session, following a significant price target cut by Needham analysts. The sharp decline comes as investors reassess the company's valuation amid changing market conditions.

Needham, while maintaining its "buy" rating on Robinhood, reduced its price target to $62 from $70. This adjustment reflects a more conservative outlook on the company's near-term growth prospects. Despite the lower target, Needham remains optimistic about Robinhood's potential, particularly highlighting the company's entry into prediction markets.

According to Needham's analysis, Robinhood's new prediction markets offering could generate an estimated $100 million in annual revenue by 2025, with an impressive 50% incremental EBITDA margin. However, this positive outlook was not enough to prevent the stock's decline, as investors appeared to focus more on the reduced price target. The market's reaction underscores the sensitivity of growth stocks to changes in analyst projections, especially in the current economic environment where investors are scrutinizing valuations more closely.