Remember Robinhood (HOOD), the discount broker that was one of the stars of the pandemic-era meme-stock frenzy? The company is now making headlines again after a promo for Robinhood Gold users saw it distribute Bitcoin (BTCUSD) worth $2.5 million. Robinhood Gold is a premium subscription service offered by the company that provides users with additional tools and benefits to enhance their investing experience.
Although this ultimately was a marketing ploy to attract new Gold users, it could prove to be a wise signal following Bitcoin's stupendous surge in 2024 and ahead of pro-Bitcoin President-elect Donald Trump’s second term.
What Happened With Robinhood Stock?
On Jan. 1, 2025, Robinhood announced plans to distribute Bitcoin worth $2.5 million to its existing Gold users. To claim the reward, eligible users needed to ensure they had the latest version of the app and a crypto account on the platform, Additionally, recipients are required to hold the reward in their wallet for at least one year.
Robinhood CEO Vlad Tenev stated that this initiative was intended to reward loyal customers rather than serve as a marketing strategy to attract new users.
Although this move grabbed investor attention, it will not materially alter Robinhood users’ Bitcoin holdings. However, the wider analyst community remains cautiously optimistic about HOOD stock, which has rallied by a massive 250% over the past year. The zero-commission trading platform is valued at a market capitalization of $36.5 billion.
What is making the Street bullish about Robinhood? Let’s try and find out.
Steady Financials
Although Robinhood’s earnings for the latest quarter slightly missed Street estimates, its overall numbers were decent.
Net revenue for the quarter came in at $637 million, up 36% from the previous year. Transaction-based revenue came in at $319 million (+72% YOY) and net interest revenues at $274 million (+9% YOY). Crypto has been a major driver for Robinhood, which accounted for 19% of the company’s $319 million in transactional revenue.
Further, the company reported earnings per share of $0.17 in the quarter, comparing favorably to the previous year’s loss of $0.09 per share.
Key operating metrics such as assets under custody ($152.2 billion, +76% YYO) and average revenue per user ($105, +31% YOY) also witnessed a rise. The previously discussed Gold users grew by 65% in the same period to 2.2 million.
Encouragingly, the company reported a cash inflow from operations in the quarter. Net cash from operating activities was at $1.8 billion compared to an outflow of $977 million in the year-ago period. However, the company’s cash balance of $4.6 billion at the end of the quarter was lower than its short-term debt levels of $6.3 billion.
Proactive Moves
Robinhood’s rising share price reflects its impressive revenue and profitability growth, driven by key initiatives like supporting retirement accounts and professional traders. The Robinhood Gold Card, which offers rewards integrated with investment accounts, and the introduction of the Robinhood Legend platform for professional traders, highlight the company’s focus on expanding its appeal beyond retail investors. The Legend platform provides advanced analytics, customizable charts, and real-time data, showcasing Robinhood’s technology-driven edge over competitors.
The company’s push into the crypto market is another growth driver. Robinhood’s user-friendly platform, low fees, and expanding token offerings appeal to both new and experienced crypto investors. Its crypto initiatives, including global transfers and targeting crypto-friendly international markets like Europe, further bolster its position in the rapidly growing sector.
Additionally, Robinhood’s $300 million acquisition of TradePMR signals its entry into the wealth management industry. This move complements its retirement account offerings and positions the company as a more comprehensive financial services provider.
The company is also exploring new opportunities, such as sports gambling, which could attract a broader audience seeking alternative income or entertainment options. Robinhood’s growing range of financial instruments and services caters to a wide variety of users, enhancing its appeal during uncertain economic times.
Overall, Robinhood’s transformation from a disruptive startup to a major financial services provider highlights its potential for long-term growth. Its focus on innovation, expanding customer engagement, and exploring emerging markets positions it well for future success.
What Do Analysts Think About Robinhood Stock?
Taking all of this into account, analysts have attributed an overall rating of “Moderate Buy” for the stock with a mean target price of $41.76 and a high target price of $60. The latter denotes upside potential of 45.1% from current levels. Out of 17 analysts covering the stock, 10 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 4 have a “Hold” rating and 1 has a “Strong Sell” rating.
