Wealthfront Plummets 16.6%: Analysts Clash Amid Earnings Optimism and Deposit Woes

Summary
• Wealthfront (WLTH) plunges 16.6% intraday to $10.50, a 9.7–11.5 range, amid mixed analyst ratings and Q3 results.
• Keefe, Bruyette & Woods reiterates Outperform with $16.50 target, while Wells Fargo lowers its price target to $15.50.
• Q3 revenue hits $93.2M (up 16% YoY), but net deposits fall short of expectations, sparking bearish sentiment.
• Analysts highlight January’s $94B asset milestone and product innovation as bullish catalysts.
Today’s sharp selloff reflects a tug-of-war between earnings optimism and deposit concerns. With 10 analysts offering conflicting price targets ranging from $14.50 to $20, WLTH’s volatility underscores the market’s struggle to balance short-term deposit worries against long-term growth potential.

Earnings Optimism vs. Deposit Concerns Fuel Volatility
Wealthfront’s 16.6% intraday drop stems from a collision of bullish earnings results and bearish deposit trends. While Q3 revenue surged 16% to $93.2M and adjusted EBITDA hit $43.8M (up 24% YoY), net deposits for Q4-to-date fell below analyst expectations. Keefe, Bruyette & Woods’ Outperform rating and $16.50 target (17x 2028 EBITDA) contrast with Wells Fargo’s revised $15.50 target, reflecting skepticism over deposit sustainability. The stock’s collapse aligns with January’s seasonal rally in assets to $94B, which analysts argue is a positive inflection but not enough to offset Q4’s weak deposit flow. Cross-product flows from cash to investments and new product launches (e.g., Nasdaq-100 Direct) remain bullish, but near-term deposit uncertainty has triggered profit-taking.

Technical Deterioration and ETF Implications
• MACD: -0.232 (bearish divergence), RSI: 43.96 (oversold), Bollinger Bands: 14.12 (upper), 13.245 (middle), 12.37 (lower).
• Key Levels: Support at $9.70 (intraday low), resistance at $11.50 (intraday high).
• Turnover Rate: 6.46% (high liquidity), Dynamic PE: 12.65 (undervalued vs. 52W low of 9.7).
• Leveraged ETF: Data unavailable, but WLTH’s 16.6% drop suggests short-term bearish momentum.
• Trading Setup: A breakdown below $9.70 could trigger a test of the 52W low, while a rebound above $11.50 may attract buyers. RSI at 44 suggests oversold conditions, but MACD divergence warns of further declines. Aggressive short-term traders may target $9.70 as a key support level, with a stop-loss above $10.50. Long-term investors might consider buying dips near $9.70, given the 17x 2028 EBITDA target from Keefe, Bruyette & Woods.

Backtest Wealthfront Stock Performance
Backtesting the performance of Wealthfront (WLTH) after a -17% intraday plunge from 2022 to now reveals a challenging period for the stock. The analysis evaluates the 30 trading days following each plunge event, highlighting the stock's recovery trajectory.1. Signal Definition: The backtest approximates a -17% intraday plunge by any trading day whose close-to-close return ≤ -17%.2. Backtest Horizon: The evaluation spans 30 trading days post-event, reflecting the medium-term impact of such significant downturns.3. Sample Window: The full period from 2022-01-01 to 2025-09-25 is considered, encompassing 137 qualifying plunge events.4. Backtest Result: The results provide insights into WLTH's recovery relative to the initial decline, showcasing the stock's ability to rebound from extreme volatility.[Learn more](https://cdn.ainvest.com/backtest/agent/session/784562/1fa5da5a-dfae-4af6-b87d-bc50ffce5593/93344b2f-40e8-472a-900f-2be43a0680cc/lwlg_plunge_backtest.json)]

WLTH at Crossroads: Deposit Woes or Growth Catalyst?
Wealthfront’s 16.6% plunge reflects a market grappling with conflicting signals: strong earnings, product innovation, and deposit concerns. While January’s $94B asset milestone and cross-product flows hint at resilience, Q4 deposit trends remain a wildcard. Analysts’ divergent price targets ($14.50–$20) underscore uncertainty, but the 12.65x dynamic PE and 17x 2028 EBITDA target suggest undervaluation. Investors should monitor the $9.70 support level and $11.50 resistance. Meanwhile, sector leader BlackRock (BLK) fell 0.38%, signaling broader market caution. For WLTH, a breakdown below $9.70 could accelerate the selloff, while a rebound above $11.50 may reignite bullish momentum. Action: Watch for $9.70 breakdown or a rebound above $11.50 to dictate next steps.