Robinhood stock price has been in a strong bull run since 2023, helped by the strong performance of American equities and cryptocurrencies. The HOOD share price peaked at $39.70, its highest level since October 2021, giving it a market cap of over $33 billion.
HOOD business is doing well
Robinhood, a top disruptor in the financial services industry, has been in a strong growth trajectory, helped by its innovation and popularity among users.
Its annual sales have jumped from $277.5 million in 2019 to over $1.865 billion in 2023. This growth trajectory has continued this year, bringing its trailing twelve-month (TTM) revenue to over $2.4 billion.
Robinhood’s recent success is mostly because of the ongoing surge in American equities, which has pushed indices like the Dow Jones and S&P 500 to their all-time high. It has also benefited from the ongoing crypto bull run that has pushed Bitcoin above $90,000.
Historically, exchanges and brokers do well when the market is rising since it attracts more investors and traders. For example, data shows that most crypto exchanges have seen higher revenues this year as many investors have moved back to the crypto market.
Robinhood has seen the number of customers on its platform rise sharply in the past few months. Funded customers rose to over 24.3 million in the last quarter, up from 23.3 million in the same period last year.
The company’s subscription package is also seeing strong uptake by consumers. Users have jumped to 2.19 million, up from 1.33 million in the same period last year.
The recent results also show that Robinhood’s assets under management (AUM) has jumped to $152 million, up from $87 million in the third quarter of 2023. This is a sign that customers are getting more comfortable adding funds to its platform, a situation that will continue in the coming years.
Robinhood stock boosted by strong growth
The most recent financial results showed that its revenue jumped by 36% in Q3 to over $637 million as the number of customers and assets jumped.
For starters, Robinhood makes money through the Payment for Order Flow (PFOF), where it receives rebates from market makers for all orders it routes through it. These market makers are often seen as wholesalers in the financial industry and include companies like Virtu and Citadel.
Its transaction revenue rose by 72% to $319 million, while its net interest and other revenues jumped to $274 million and $44 million. Most importantly, Robinhood has become a highly profitable company as its net income jumped to $150 million in the last quarter.
Robinhood has done more things to boost its business. It became the first broker to offer 24-hours of stock trading in the US. It has also expanded its business in the UK, and its goal is to move to other countries.
The company also acquired Bitstamp, a leading player in the crypto industry, in a transaction that will close in 2025. This deal will make it one of the top players in the crypto industry by offering additional services outside of its main application.
It will also be a good way to expand its business around the world since Bitstamp has licenses in over 50 countries.
Stock analysts believe that Robinhood has more room to grow as it continues to challenge other top companies like Schwab and TD Ameritrade. Its innovation has also helped it fend off competition from the likes of eToro, Webull, SoFi Invest, Public, and MooMoo.
These analysts believe that Robinhood’s revenue for the current quarter will be $654 million, a 39% increase from the same period last year. It will then make $677 million next quarter, while its annual revenue this year will be $2.61 billion.
Robinhood’s profitability will keep rising, moving from 49 cents last year to $1.01 this year and $1.04 next year.
As such, while Robinhood is an overvalued company, analysts believe that it is justified because of its strong growth. HOOD trades at a trailing twelve-month price-to-earnings of 62, much higher than other companies. Its enterprise value to revenue stands at 11.8, while its EV to EBITDA is 47.35.
Robinhood stock price analysis
The weekly chart shows that the HOOD share price has been in a strong uptrend in the past few years. It has moved to the 38.2% Fibonacci Retracement point at $36.73. It has moved above the 50-week moving average.
The Relative Strength Index (RSI) and the MACD indicators have continued rising. Therefore, there are signs that the stock is forming a cup and handle pattern, whose upper side is at $85.03.
This price action means that the stock will rise by 133% to an all-time high. If this happens, its market cap will get to over $78 billion.
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