On Thursday, Keefe, Bruyette & Woods maintained a Market Perform rating on shares of Robinhood Markets (NASDAQ:HOOD) with a steady price target of $24.00. During Robinhood's first investor day, the company presented its strategic goals focusing on long-term earnings per share (EPS) growth and provided details on its new products and expansion plans.
Preliminary statistics for November indicated a significant rise in trading activity, surpassing the firm's quarterly estimates. This momentum is reflected in the company's strong financial performance, with revenue growing 35.74% and maintaining a healthy gross profit margin of 86.46%. InvestingPro subscribers have access to 12 additional key insights about Robinhood's growth prospects.
Trading volumes in equities, options, and cryptocurrencies all showed an increase for the month of November. Robinhood has set its sights on achieving double-digit revenue growth over time, supported by a projected net deposit growth of over 20%. Management aims to keep expense growth rates below revenue increases, with 90% of costs being fixed and core expenses expected to rise at a low single-digit rate or less.
Moreover, the company anticipates low single-digit or lesser growth in share count, contributing to a double-digit long-term EPS growth. The company's financial health score on InvestingPro is rated as "GREAT," supporting these ambitious growth targets.
Robinhood outlined several strategies to enhance its cryptocurrency services. These include adding more tokens to its platform, boosting staking adoption, expanding cryptocurrency trading to international markets, and positioning itself as the go-to platform for institutional cryptocurrency trading.
These initiatives are part of Robinhood's broader objective to diversify and strengthen its financial offerings in the face of an evolving digital assets landscape. With a market capitalization of $35 billion and a current ratio of 1.11, the company appears well-positioned to execute its expansion plans.
In other recent news, Robinhood Markets reported a 36% year-over-year increase in Q3 2024 revenues to $637 million. The company also acquired TradePMR for $300 million, adding $40 billion in assets under administration and over 1,000 Registered Investment Advisors.
Analyst firms Mizuho (NYSE:MFG) Securities, Piper Sandler, KeyBanc Capital Markets, Deutsche Bank (ETR:DBKGn), and Morgan Stanley (NYSE:MS) have all adjusted their outlooks on Robinhood, with upgrades and raised price targets citing the company's potential for future growth.
Recently, Robinhood expanded its cryptocurrency offerings to 20 tokens and launched new trading products such as Index Options and Futures, with plans to introduce futures trading in early 2025. Robinhood's November 2024 operating data showed a significant increase in Funded Customers and Assets Under Custody, with customer Net Deposits exceeding $5 billion.
Lastly, Robinhood's chief legal and compliance officer, Dan Gallagher, is being considered for the chair of the Securities and Exchange Commission in the upcoming administration. These are recent developments.
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