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Tuesday, Robinhood Markets (NASDAQ:HOOD) shares, currently trading at $40.08, received a positive outlook from Compass Point, as the research firm initiated coverage with a Buy rating and set a price target of $61.00. The stock has shown remarkable momentum, delivering a 130.75% return over the past year according to InvestingPro data. The firm sees potential for Robinhood to increase Average Revenue Per User (ARPU) among its 12 million cryptocurrency users, particularly with a favorable U.S. regulatory environment on the horizon.
The analysts at Compass Point estimate that Robinhood could tap into a $665 million revenue opportunity by cross-selling existing cryptocurrency products to its U.S. user base. This potential expansion builds on the company’s strong revenue growth of 58.23% and current EBITDA of $1.43 billion. Their projections for the company’s 2026 EBITDA are 16% higher than the consensus, which they believe conservatively assumes limited industry growth compared to the first quarter of 2025.
According to Compass Point, Robinhood is well-positioned to benefit from secular trends, especially by serving younger generations who have been marginalized by housing and asset inflation. InvestingPro analysis indicates the stock is currently overvalued, with a P/E ratio of 25.12 and a Price/Book ratio of 4.45. For deeper insights into Robinhood’s valuation and growth prospects, check out the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The firm anticipates that Robinhood’s shares could rebound as revenues for 2025-2026 are expected to surpass current expectations. They also suggest that broader user activity may demonstrate more resilience than in previous market cycles.
Compass Point’s analysis points to a robust future for Robinhood, with strategic moves in the cryptocurrency space and an appeal to a demographic that has been largely overlooked by traditional financial institutions. The firm’s bullish stance is underpinned by the belief that Robinhood’s user engagement and revenue streams will continue to grow, defying conservative market growth assumptions. InvestingPro has identified multiple additional promising indicators for HOOD, including its profitable status with a diluted EPS of $1.56 and strong financial health metrics. Subscribers can access 8 more exclusive ProTips and detailed financial analysis.
In other recent news, Robinhood Markets has introduced a new prediction markets hub within its app, allowing users to trade on major event outcomes such as federal funds rate targets and college basketball tournaments. This move marks a significant expansion beyond Robinhood’s traditional stock and cryptocurrency trading platforms. The prediction markets hub is expected to operate across the U.S. in partnership with KalshiEX LLC, a CFTC-regulated exchange, and aims to enhance liquidity, transparency, and price discovery. Analysts from Mizuho (NYSE:MFG) have maintained an Outperform rating on Robinhood, with a price target of $80, citing the strategic alignment between Robinhood’s user base and the sports betting market. Barclays (LON:BARC) analyst Benjamin Budish noted potential opportunities with larger customers, though he acknowledged regulatory uncertainties in sports prediction markets.
In another development, Keefe, Bruyette & Woods have maintained their Market Perform rating on Robinhood, with a $60 price target, highlighting a 5% month-over-month growth in margin balances. Despite a decline in equity and cryptocurrency trading volumes, options volumes exceeded expectations, contributing positively to Robinhood’s revenue. The firm’s first-quarter earnings per share estimate for Robinhood stands at $0.40, slightly above the consensus estimate of $0.37. Additionally, David Sacks, a former adviser to Donald Trump, divested over $200 million in digital assets, including shares in Robinhood, as part of a broader liquidation of cryptocurrency holdings.
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