Robinhood stock swung higher Monday after receiving an upgrade. Meanwhile, the mobile brokerage platform is moving into the investment advisory space after announcing plans to acquire TradePMR last week.
Morgan Stanley on Monday upgraded Robinhood to overweight from equal weight and hiked its price target on the shares to 55 from 24, The Fly reported. Robinhood's revenue growth looks stronger in the wake of the U.S. elections in early November, boosted by sustained retail trading as support for cryptocurrency broadens. Meanwhile, acquisitions are opening up as "animal spirits revive," Morgan Stanley wrote, referencing John Maynard Keynes' concept that human emotions and herd mentality affect consumer confidence and investing mentalities.
Robinhood is "clearly executing" on plans to broaden offerings, aiming to capture more wallet share and expand its total addressable market, the firm wrote, noting the recently-announced TradePMR purchase. And although shares are already up 100% this year, Morgan Stanley sees "more room to run," based on Robinhood's "discounted valuation," which will likely continue into 2025.
Robinhood last week announced it agreed to acquire custodial and portfolio management platform TradePMR. TradePMR serves about 400 Registered Investment Advisor (RIA) firms, with more than $40 billion in assets under management. With the acquisition, Robinhood is expanding to take aim at industry giant Charles Schwab, which is the nation's largest RIA custodian.
"The needs of Robinhood customers are evolving, and they are seeking advice on how to build and manage their growing portfolios," the company said in a blog post. The TradePMR platform will connect "financial advisors to a new generation of investors," Robinhood added.
Robinhood estimates $84 trillion in wealth will transfer over the next two decades, which should benefit its core customers. The company noted about 75% of those customers are Gen Z and millennials. Those customers range in age from 12 to 43.
The estimated $300 million cash-and-stock deal is expected to close in the first half of 2025.
Robinhood Stock Jumps Early
HOOD stock pared gains to 3.3% Monday after jumping 7% in premarket trade. The stock is trading around its highest level since November 2021.
Robinhood shares have soared nearly 197% this year through Friday's close, and are trading well above their technical moving averages.
Charles Schwab stock ticked higher Monday. SCHW stock is trading in a buy zone, above a 79.49 buy point.
Charles Schwab stock has advanced almost 19% this year.
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