Robinhood Markets is Wednesday's IBD Stock Of The Day. Robinhood stock advanced toward a new buy point Wednesday after the trading app announced plans for a $1 billion stock buyback program late Tuesday.
The $1 billion share repurchase program will take place over three years, starting in the third quarter, according to Robinhood. The move to buy back shares of Robinhood stock could signal the IBD IPO Leader is looking to move beyond its IPO startup label, scooping up shares it believes are undervalued.
Robinhood, the upstart online brokerage which made its public debut in 2021, has an inconsistent history of quarterly earnings. However, on May 8 the online trading platform reported better-than-expected first-quarter earnings and revenue due to a surge in retail cryptocurrency trading.
Robinhood earned 18 cents a share, a big shift from a year-ago loss. Revenue surged 40% year over year, to a record $618 million.
Analysts expect the first-ever full-year profit for Robinhood stock to come in 2024, at 50 cents per share. In 2023, the company lost 61 cents per share.
"We delivered significant revenue growth and margin expansion in Q1 as we remain focused on driving another year of profitable growth in 2024," Chief Executive Jason Warnick said at the time.
"In Q1, we set records for quarterly revenues, net income and EPS, even as we stepped up our marketing and growth investments," Warnick added.
Robinhood Stock Performance
HOOD shares gained 2.8% to 21.05 during market trade on Wednesday. Robinhood stock is building a cup with a high handle. The buy point is 21.21, the May 21 high, according to MarketSurge analysis.
The stock has gained more than 60% so far in 2024, surging nearly 28% in May, in part due to crypto-fueled retail trading.
On May 17, Bank of America Securities upgraded Robinhood stock, saying retail investors are becoming more active.
Analyst Craig Siegenthaler noted that the brokerage's retail engagement peaked in 2021, before declining significantly in 2023. However, BofA has seen a rebound in multiple key metrics, including organic growth and margin loan utilization, as well as year-over-year trading activity and payment order flow.
Siegenthaler expects that trend to continue through 2026.
The firm called HOOD's valuation attractive following increases in EPS and earnings before interest, taxes, depreciation and amortization. BofA hiked its price target on HOOD stock to 24 from 14.
Robinhood stock surged more than 12% on May 17 following the upgrade.
Robinhood stock has a 97 Composite Rating out of a best-possible 99. Shares also have a stellar 97 Relative Strength Rating and an 80 EPS Rating.
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