On Thursday, Mizuho (NYSE:MFG) Securities analyst Dan Dolev adjusted the price target for Robinhood Markets (NASDAQ:HOOD) stock, increasing it to $80 from the previous $65, while maintaining an Outperform rating on the company’s shares. The revision follows Robinhood’s impressive fourth-quarter results, which showcased several key performance indicators. The stock, currently trading at $55.91, has demonstrated remarkable momentum with a 372% return over the past year. According to InvestingPro analysis, the company appears overvalued at current levels, despite its strong growth trajectory.
Robinhood’s quarter witnessed a substantial uptick in user engagement, with funded customer accounts growing by 850,000 quarter over quarter. This figure represents a significant acceleration compared to the 160,000 sequential growth observed in the third quarter. Additionally, the company reported that over 10% of its customers have subscribed to its gold service, totaling 2.64 million subscribers. This growth has contributed to impressive revenue expansion, with InvestingPro data showing a 35.74% year-over-year revenue increase and a healthy gross profit margin of 86.46%.
The total assets under custody (AUC) for Robinhood soared by 27% quarter over quarter to reach $193 billion. This includes a remarkable year-over-year increase in retirement AUC, which expanded sevenfold to $13.1 billion, up $3.2 billion from the previous quarter. These metrics underscore the rapid growth trajectory of the company.
Dolev’s commentary highlighted the ambitious plans of Robinhood, aiming for a tenfold increase in business size over the next decade. This aspiration is set against a total addressable market (TAM) estimated to be over $600 billion, which would be a 200-fold increase from the company’s 2024 revenue. According to Dolev, Robinhood’s consistent performance indicates that these targets are within reach.
The analyst’s optimism is reflected in the revised estimates and price target, suggesting confidence in Robinhood’s potential for continued growth and expansion in the financial services market. For deeper insights into Robinhood’s valuation and growth prospects, InvestingPro subscribers can access 13 additional ProTips and a comprehensive Pro Research Report, which provides detailed analysis of the company’s financial health and future potential.
In other recent news, Robinhood Markets has been the subject of several analyst reviews following its strong performance in the fourth quarter. Bernstein SocGen Group raised the price target for Robinhood to $105, citing the company’s impressive crypto revenue growth. The company reported a 487% sequential quarter-over-quarter growth in crypto revenues, contributing significantly to its first $1 billion revenue quarter.
Keefe, Bruyette & Woods maintained their Market Perform rating on Robinhood with a steady price target of $38. The firm highlighted Robinhood’s higher-than-expected revenues and lower stock compensation expenses. Notably, cryptocurrency transaction revenues were a standout, reaching $373 million, surpassing both Keefe, Bruyette & Woods’ estimate and the consensus estimate.
Meanwhile, Citi raised its price target for Robinhood to $60, following the company’s robust fourth-quarter performance which surpassed Citi’s earnings per share (EPS) estimates. JMP Securities increased their price target for Robinhood to $77, highlighting the company’s strong performance and anticipated growth. The firm praised Robinhood’s management for their disciplined approach to controlling expenses, contributing to further margin growth.
Lastly, Barclays (LON:BARC) increased the price target on Robinhood shares to $76, following the company’s fourth-quarter results which surpassed Wall Street’s revenue and adjusted EBITDA expectations. These recent developments highlight the positive outlook for Robinhood’s future financial performance.
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