Discount online brokerage firm Robinhood Markets, Inc. (HOOD) is a California-based financial services company providing investors with services such as cryptocurrency trading, dividend reinvestment, fractional share investment, and more. The platform allows real-time trading in stocks, crypto, and options, along with a Robinhood Gold membership tier and Robinhood Cash debit card program. It earns transactional fees from routing orders to market makers when an order is executed.
Given its close ties to the cryptocurrency market, shares of Robinhood have spiked 35% since the start of the year alongside Bitcoin's (BTCUSD) breakout to record highs, easily outperforming the 9.2% return of the S&P 500 Index ($SPX). However, HOOD still trades more than 11% below its 52-week high.
Robinhood released its Q4 results in February, where it posted a profit of $30 million, marking its second-ever profitable quarter. Revenue for the period arrived at $471 million, up 24% from the year-ago period. Interest revenue improved 41% to $236 million, while transaction-based revenue came in at $200 million, up 8% YoY. Cryptocurrencies revenue accounted for $43 million of the latter, up 10%, which helped to offset a small decline in options revenue.
For the full year, however, HOOD reported a net loss of $487 million, even as revenue rose 37% YoY to $1.87 billion.
Notably, management also addressed its expanding global reach in crypto on the quarterly earnings call.
The discount broker has launched brokerage services in the U.K., along with offering crypto services in the European Union (EU) - which "expands the addressable market quite dramatically," according to CEO Vlad Tenev, with the executive noting that HOOD serves “tens of thousands of customers” internationally.
Later in the call, he added, “While it's still early, we really like the initial traction we're seeing. We're already seeing a healthy portion of our user growth coming from outside of the U.S.”
More recently, HOOD reported its February monthly trading volumes, which showed crypto trading volumes up 10% sequentially to $6.5 billion.
Bernstein Sets New Street-High Robinhood Target
On the news, Bernstein initiated coverage of Robinhood with an “Outperform” rating and a price target of $30. The analysts expect “unprecedented institutional adoption” to fuel Bitcoin significantly higher, which should be a major positive for HOOD, in their view.
“We expect total crypto market cap to reach $7.5T by 2025 versus $2.6T today,” wrote the firm, which they expect to drive a nine-fold increase in HOOD's revenues.
The new price target from Bernstein - the highest on Wall Street - implies expected upside of 74.4% from current levels.
What Do Analysts Expect for HOOD?
Other analysts are on the fence about Robinhood at the moment, with a consensus “Hold” rating among 15 analysts in coverage.
Four have a “Strong Buy” rating, 8 have a “Hold” rating, 1 has a “Moderate Sell” rating, and 2 have a “Strong Sell” rating on HOOD. The mean price target from this group is $14.61, implying a potential downside of 15.5%.
