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On Thursday, Bernstein SocGen Group maintained its Outperform rating on Robinhood Markets (NASDAQ:HOOD), with a steady price target of $105.00. The stock, which has delivered an impressive 123.54% return over the past year and currently trades at $44.73, continues to show strong momentum. According to InvestingPro analysis, the company appears overvalued at current levels, though analysts maintain bullish targets. The brokerage firm’s stance comes in the wake of Robinhood’s announcement of launching three innovative products aimed at wealth management and banking sectors.
Robinhood’s new offerings include Robinhood Strategies, Cortex, an AI assistant, and Robinhood Private Banking. These products are designed to attract a tech-savvy younger generation by making high-end private banking and wealth services more accessible. With a market capitalization of $39.61 billion and strong revenue growth of 58.23% in the last twelve months, the company aims to capitalize on the significant wealth transfer to this demographic by integrating disruptive technologies such as cryptocurrency and AI into its services. For deeper insights into Robinhood’s growth strategy and financial health (currently rated as GOOD by InvestingPro), investors can access the comprehensive Pro Research Report, available exclusively to subscribers.
The firm’s analysts pointed out that Robinhood’s Gold platform, which now encompasses private banking, preferred deposit rates, trading, a top-tier Gold credit card, automated investment advisory for a flat fee, and an AI research assistant, is a critical component of its strategy. Trading at a P/E ratio of 27.61 and maintaining a healthy gross profit margin of 90.65%, the company has demonstrated strong financial performance. The Gold platform has seen its subscriber count nearly double in 2024, reaching 3.2 million users out of approximately 25 million total accounts. This growth suggests substantial potential for further expansion.
Robinhood’s shift in focus from primarily serving active traders to becoming a broader financial platform is evident in the growth of its non-trading revenue, which accounted for 47% of the total in 2024. Additionally, the average customer balance has increased from $2,700 to $7,700 over two years, indicating a transition to a higher value money platform.
The Gold credit card, initially available to 100,000 users with plans to expand access to an additional 100,000, is set to be integrated into a full banking application. Robinhood is also leveraging its acquisition of TradePMR (RIA) to develop a comprehensive suite of advisory services.
Bernstein’s positive outlook on Robinhood is underpinned by the belief that investors may be underestimating the company’s potential as a broad financial platform. The firm values Robinhood at a target multiple of 33 times its projected 2026 earnings, which implies a Price/Earnings to Growth (PEG) ratio of approximately 0.5x, compared to a median of about 1.2x for its peers.
In other recent news, Robinhood Markets is under investigation by Massachusetts’ top securities regulator for launching a prediction-markets hub. The probe seeks information about Robinhood’s marketing materials and the number of Massachusetts residents trading contracts related to college sports events. Meanwhile, KeyBanc Capital Markets has maintained an Overweight rating on Robinhood, setting a price target of $75.00, citing confidence in the company’s financial model and new product offerings. Compass Point has initiated coverage with a Buy rating and a $61.00 price target, highlighting potential revenue growth from Robinhood’s cryptocurrency products. Mizuho (NYSE:MFG) Securities also reiterated an Outperform rating with an $80.00 price target, noting the strategic expansion into prediction markets and the alignment with Robinhood’s user interest in sports betting. Additionally, Robinhood is planning to integrate Bitstamp crypto exchange services by 2025, aiming to broaden its crypto offerings. The company’s collaboration with Kalshi to launch a platform for predicting outcomes in various sectors further indicates its strategic direction. Robinhood’s recent developments reflect its ongoing efforts to diversify revenue streams and enhance user engagement.
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