Robinhood Markets (HOOD) stock plunged 5% in Friday's pre-market trading session, following Needham's decision to cut its price target on the company. The move comes despite the firm maintaining its buy rating on the stock, highlighting a complex sentiment towards the popular trading platform.

Needham lowered its price target for Robinhood from $70 to $62, signaling some caution about the company's near-term prospects. However, the firm remains bullish on Robinhood's long-term potential, as evidenced by the maintained buy rating. This mixed signal from a major analyst likely contributed to the stock's sharp decline.

Interestingly, the price target cut comes alongside positive news about Robinhood's expansion into prediction markets. Needham estimates that this new offering could generate $100 million in annual revenue by 2025, with an impressive 50% incremental EBITDA margin. Despite this potential growth driver, investors seem to be focusing on the lowered price target, leading to the significant sell-off in Robinhood shares.