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On Thursday, KeyBanc Capital Markets updated its outlook on Robinhood Markets (NASDAQ:HOOD) shares, raising the price target to $57 from the previous $50, while maintaining an Overweight rating. The upgrade comes as the stock has delivered remarkable returns, surging over 150% in the past six months and trading near its 52-week high of $52.06. According to InvestingPro analysis, the company, now valued at $45.2 billion, appears overvalued at current levels. Analysts at the firm highlighted positive survey results that support the fintech company’s near-term product initiatives.
The KeyBanc analyst, Alex Markgraff, noted increased interest in Robinhood’s Gold subscriber program and confirmed demand for the Gold Card. The survey results, which included responses related to the company’s future plans, showed a surprising and increased interest in futures trading, set to launch in 2025. The findings are detailed in slides from the survey report. InvestingPro data shows the company’s strong execution, with revenue growing 35.7% and achieving profitability with $525 million in net income over the last twelve months.
Additionally, the survey indicated a strong customer appetite for investment advisory services. This interest is seen as a validation of Robinhood’s strategic direction, especially considering the recent acquisition of TradePMR, a provider of brokerage and custody services. According to the survey, this move could signal the company’s focus on adding longer-duration assets to its offerings.
Despite the positive outlook, there was a slight decrease in the intent to open retirement accounts, as indicated by the survey results. Moreover, the weighted average fee that respondents are willing to pay for advisory services was described as yield-dilutive. Nonetheless, this was not unexpected, according to the analyst.
KeyBanc’s updated price target and rating reflect the firm’s confidence in Robinhood’s growth trajectory and its ability to capitalize on its product expansion and strategic acquisitions. The Overweight rating suggests that KeyBanc analysts expect the stock to outperform the average total return of stocks in the analyst’s coverage universe over the next 6 to 12 months. With earnings scheduled for February 12, 2025, investors can access comprehensive analysis and 14 additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Robinhood’s CEO, Vlad Tenev, has proposed the tokenization of private equity to democratize access to investments. This move towards blockchain technology could potentially allow retail investors to participate in the growth of high-value private companies. However, Tenev emphasized the need for a clear regulatory framework from the U.S. Securities and Exchange Commission (SEC) to support this shift.
In addition to this, Robinhood is expanding its cryptocurrency-related offerings with the introduction of futures trading for commodities and financial instruments, including bitcoin, oil, and gold. This addition is part of Robinhood’s broader strategy to provide customers with a diverse array of trading options.
Furthermore, analysts from Morgan Stanley (NYSE:MS) and Bernstein SocGen have given Robinhood a favorable outlook. Morgan Stanley added Robinhood to its Financials’ Finest list, citing the company’s sustainable business model and potential for growth. Bernstein SocGen also maintained an Outperform rating, expressing confidence in Robinhood’s growth trajectory and profitability for 2025.
Lastly, Robinhood has settled regulatory issues with the SEC for $45 million, a move fully accounted for in the previous year’s accruals. These are the recent developments for Robinhood, which continues to expand its offerings and position itself for future growth.
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