On Tuesday, Piper Sandler reiterated an Overweight rating on Robinhood Markets (NASDAQ:HOOD), with a steady price target of $54.00. The stock has shown remarkable momentum, delivering a 201% return over the past year according to InvestingPro data, despite its characteristic high volatility.
The brokerage firm's analyst highlighted Robinhood's robust December trading volumes, which showed a significant year-over-year increase. Equity trading volumes surged by 117% to $137 billion, options contracts traded increased by 44% to 150 million, and cryptocurrency trading volumes soared by 331% to $28 billion.
The resilience of cryptocurrency trading volumes post-election was particularly notable, with only a 20% decline from the high levels seen in November, and figures more than doubling Piper Sandler's initial estimates.
Additionally, Jason Warnick, CFO of Robinhood, conveyed at an industry conference earlier in December that the company had increased pricing on cryptocurrency trades in the fourth quarter of 2024, reaching up to 55 basis points compared to the average of 42 basis points in the third quarter. This pricing strategy has contributed to the company's strong revenue growth of 35.74% over the last twelve months.
Based on these strong trading volumes, Piper Sandler raised its fourth-quarter 2024 earnings per share (EPS) estimate for Robinhood from $0.33 to $0.47. Consequently, the firm also revised its EPS forecasts for the years 2024 to 2026 upwards, from $0.89, $1.07, and $1.28 to $1.03, $1.16, and $1.33, respectively. The $54 price target represents approximately 42 times the firm's 2026 EPS estimate, and the Overweight rating has been maintained.
According to InvestingPro analysis, Robinhood currently trades at a P/E ratio of 66.24, with investors anticipating the company's next earnings report on January 23, 2025. For deeper insights into Robinhood's valuation and growth prospects, including 13 additional ProTips, subscribers can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Microstrategy (NASDAQ:MSTR) and other companies with significant cryptocurrency exposure experienced a downturn in the market due to a significant pullback in Bitcoin's value and the Federal Reserve's signals of interest rate caution. This shift in investor sentiment led to a record outflow of $680 million from a group of US exchange-traded funds investing directly in Bitcoin, signaling a broader market apprehension towards speculative crypto assets.
On a brighter note, Robinhood Markets has been the focus of several analyst firms. Goldman Sachs reaffirmed its Buy rating for Robinhood, following the company's impressive 225% return over the past year and a notable 22% month-over-month growth in end-of-period assets under custody. The firm also projected Robinhood's fourth-quarter trading revenue to be 51% higher than the consensus estimates, indicating significant growth across all of Robinhood's trading products.
Barclays (LON:BARC) upgraded Robinhood's shares to Overweight, citing a positive outlook on cryptocurrency and expansion. Mizuho (NYSE:MFG) Securities also increased Robinhood's price target to $60, maintaining an 'Outperform' rating, based on the company's potential to tap into a substantial total addressable market.
Keefe, Bruyette & Woods maintained a 'Market Perform' rating, reflecting Robinhood's strategic goals and robust financial performance. Robinhood reported a 36% year-over-year increase in Q3 2024 revenues to $637 million and acquired TradePMR for $300 million. The company also expanded its cryptocurrency offerings to 20 tokens and launched new trading products, marking recent developments in the company's expansion.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.