On Thursday, Mizuho (NYSE:MFG) Securities expressed a positive outlook on Robinhood Markets (NASDAQ:HOOD), a popular trading platform, by increasing the price target to $60 from the previous $34 while maintaining an Outperform rating. The stock, currently trading at $40, has delivered an impressive 214% return year-to-date according to InvestingPro data. The firm's optimism is based on Robinhood's potential to leverage its market opportunities and recent performance.
The analyst at Mizuho highlighted the company's capacity to access a substantial total addressable market (TAM) of $600 billion in revenue, which is significantly larger than its current annual revenue of $2.4 billion and remains largely untapped. With a market capitalization of $35.4 billion and revenue growth of 36% in the last twelve months, Robinhood's initiatives to engage more actively with traders are seen as a near-term growth driver, with a targeted market of over $20 billion.
Furthermore, the brokerage firm sees medium to long-term growth prospects for Robinhood, including the expansion of customer financial activities and the company's role in the global financial ecosystem, each representing TAMs of over $180 billion and $400 billion, respectively.
The analyst's confidence is bolstered by Robinhood's ambitious management goals to expand the company's size tenfold. This target is considered achievable, noting that Robinhood has already increased its revenue by ten times since 2019. The revised price target reflects an adjustment of near-term estimates following a strong performance in November, as well as a positive revision of medium-term financial projections for the company.
In other recent news, Robinhood Markets reported a 36% year-over-year increase in Q3 2024 revenues to $637 million, and adjusted EBITDA nearly doubled to $268 million. The company also acquired TradePMR for $300 million, adding $40 billion in assets under administration and over 1,000 Registered Investment Advisors.
Analyst firms including Piper Sandler, KeyBanc Capital Markets, Deutsche Bank (ETR:DBKGn), and Morgan Stanley (NYSE:MS) have all adjusted their outlooks on Robinhood, with upgrades and raised price targets citing the company's potential for future growth.
Recently, Robinhood expanded its cryptocurrency offerings to 20 tokens and launched new trading products such as Index Options and Futures, with plans to introduce futures trading in early 2025. Robinhood's November 2024 operating data showed a significant increase in Funded Customers and Assets Under Custody, with customer Net Deposits exceeding $5 billion.
Lastly, Robinhood's chief legal and compliance officer, Dan Gallagher, is being considered for the chair of the Securities and Exchange Commission in the upcoming administration.
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