Robinhood is the IBD Stock Of The Day for Tuesday. Shares of the brokerage platform rallied in early trade to clear a buy point.
Robinhood spiked Tuesday after Barclays on Monday raised its price target on HOOD stock. Barclays, in an earnings preview for brokers, asset managers and exchanges, wrote that we continue to get closer to a "normal" market environment. The initial public offering market and merger markets are "showing signs of life," according to the firm. Meanwhile, Federal Reserve rate expectations are "driving renewed optimism."
However, Barclays noted that Q3 itself has seen softer-than-expected activity for the industry groups. The firm lifted its price target on Robinhood to 23 from 20 and maintained an equal weight rating on the shares.
Robinhood Momentum
Separately, Deutsche Bank on Sept. 30 said it remains "encouraged" by Robinhood's revenue and earnings momentum. The company has a range of initiatives to bring more customers to the platform, leverage addressable markets and deepen user activity.
Deutsche Bank sees Robinhood generating net new assets at an annualized pace of over 20% through 2025, slowing to 20% in 2026. This should help enable continued adjusted EBITDA margin expansion and "strong" double-digit earnings growth in 2025 and 2026. Deutsche Bank raised its price target on HOOD stock to 27 from 24 and kept a buy rating on the shares.
Citi also lifted its price target on HOOD stock to 23 from 19 on Sept. 27, citing strong net deposit trends and trading activity in recent periods. The firm has a neutral rating on the shares. All broker information from Barclays, Deutsche Bank and Citi was reported by The Fly.
Crypto Expansion, Earnings Preview
Elsewhere, Robinhood Crypto on Oct. 1 launched cryptocurrency transfers for customers in Europe. The launch allows customers to deposit and withdraw more than 20 cryptos, including bitcoin, ethereum, solana, USD Coin and others. Robinhood Crypto is also providing a limited offer for a 1% match for all crypto deposits for customers in Europe.
Other benefits include bitcoin trades with zero fees when signing up, the ability to stake solana tokens with about a 5.23% APY and 15% rewards on USDC holdings.
Meanwhile, Robinhood and London-based fintech Revolut are exploring the opportunity to launch stablecoins, Bloomberg reported in late September. Stablecoins are cryptocurrencies designed to hold a specific price over time, and the value is tied to a reference asset. Many stablecoins are designed to maintain at $1.
Digital asset firm Tether's USDT token currently accounts for more than two-thirds of the $170 billion stablecoin market.
Robinhood reported $81 million in cryptocurrency revenue for Q2, down from $126 million in the prior quarter. FactSet predicts Robinhood will record $68 million in crypto revenue for Q3, falling to $66 million in Q4. Analysts expect that to pick up in 2025, with $80 million or more in quarterly crypto revenue. FactSet sees crypto revenue gains to $90 million or more per quarter in 2026.
For Q3 results on Oct. 30, FactSet predicts Robinhood will report earnings of 18 cents per share, improving from a loss of 9 cents the year prior. Analysts see revenue rising more than 39% to $651 million. Monthly active users are expected to increase to 12.05 million, up from 11.8 million in Q2 and 10.3 million last year, respectively.
Robinhood has posted triple-digit earnings growth in the last three quarters and averaged a 34.7% sales gain during that period.
Robinhood Stock
HOOD stock rallied 7.6% and broke out Tuesday, jumping above a 24.06 cup-with-handle buy point. Investors could use the Sept. 30 high of 24.13 as an alternate handle buy point.
The latest entry comes after Robinhood broke out of a seven-week cup-with-handle base on Sept. 12. But shares paused at the top of that buy zone the last three weeks, which created a new handle and the new buying opportunity.
Robinhood has vaulted nearly 97% in 2024 through Monday's close.
HOOD stock is a member of the IBD Big Cap 20 list and leads the Finance-Investment Bank/Bankers Group, according to the IBD Stock Checkup.
Robinhood has a perfect 99 Composite Rating, which combines various technical indicators into one easy-to-read score. The stock has earned an 81 EPS Rating based on its recent earnings streak. Meanwhile, Robinhood's relative strength line is trending up toward 52-week highs, giving it a 95 RS Rating.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
