Interactive Brokers shares jump as it secures spot in S&P 500
On Thursday, JMP Securities analyst Devin Ryan affirmed a Market Outperform rating and a $70 price target on Robinhood Markets (NASDAQ:HOOD), highlighting the company’s robust growth trajectory. According to InvestingPro data, HOOD has demonstrated remarkable momentum with a 194.95% return over the past year and currently commands a market capitalization of $43.34 billion. Ryan noted that Robinhood’s revenue of $927 million, a 50% increase year-over-year, slightly surpassed estimates by approximately 2%. Although expenses were marginally higher than projected, the increase was attributed to one-time transaction costs related to the TradePMR deal, which are not expected to recur.
Adjusted EBITDA for Robinhood stood at $470 million, around 8% below JMP’s estimate, mainly due to lower stock-based compensation and expenses from the TradePMR transaction. Despite this, Robinhood’s trend of profitable growth is accelerating, with a 51% Adjusted EBITDA margin and a 40% GAAP pretax margin. InvestingPro analysis shows the company maintains a strong gross profit margin of 90.65% and trades at a P/E ratio of 29.86, reflecting investor confidence in its growth potential. For deeper insights into HOOD’s valuation and growth metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The company’s GAAP earnings per share (EPS) of $0.37 marked its sixth consecutive quarter of profitability, surging by approximately 111% compared to the same period last year.
The analyst also pointed out that Robinhood repurchased $322 million of its stock during the quarter and boosted the share repurchase authorization by $500 million, raising the total buyback program to $1.5 billion. The firm plans to utilize the remaining $800 million-plus over the coming two years.
In terms of customer engagement and product expansion, Robinhood saw a record $18 billion in net new deposits for the quarter, a 60% increase from the first quarter of 2024. Retirement assets grew threefold year-over-year, and the number of funded customers rose by 1.9 million sequentially to 25.8 million. This growth has contributed to the company’s impressive revenue expansion, with InvestingPro data showing a 58.23% year-over-year revenue growth and an overall Financial Health Score of "GOOD." Additionally, Robinhood released another 100,000 credit cards from its waiting list, contributing to the rapid growth of its Gold subscription accounts, which offer additional features and preferential pricing.
Ryan emphasized the significant potential of the Gold subscription service, projecting it could turn into a multi-billion-dollar revenue stream for Robinhood. He also suggested that the Gold ecosystem could play a pivotal role in attracting new customers and capturing a larger share of their financial needs.
In other recent news, Robinhood Markets Inc. reported its first-quarter 2025 earnings, which presented a mixed picture for investors. The company exceeded analysts’ expectations for earnings per share, reporting $0.37 compared to the forecasted $0.36. However, Robinhood’s revenue fell slightly short of projections, coming in at $927 million against an anticipated $929.83 million. Despite this minor revenue shortfall, the company experienced significant year-over-year growth, with revenues increasing by 50%.
In terms of strategic moves, Robinhood continues to expand its operations, including forays into futures trading and international markets. The company is also making strides with strategic acquisitions, such as the planned acquisition of Bitstamp, expected to close mid-year. Analyst feedback from firms like Citi and Mizuho (NYSE:MFG) highlighted the company’s strong performance, with particular attention to the growth of Robinhood Gold, which has seen its subscriber base nearly double year-over-year.
Additionally, Robinhood’s expansion into new product offerings, such as prediction markets and Robinhood Banking, is bolstering its growth potential. The company is also focusing on enhancing customer engagement through new products like Robinhood Strategies and Cortex. Analysts remain attentive to Robinhood’s trajectory, with some expressing optimism about its ability to capture market share and expand its financial ecosystem.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.