MENLO PARK, Calif. - Robinhood (NASDAQ:HOOD) Markets, Inc. (NASDAQ: HOOD), a financial services company, has reported a rise in its monthly operating data for May 2024, with notable increases in funded customers and assets under custody (AUC). Funded customers reached 24.1 million by the end of May, marking an increase of approximately 120,000 from the previous month and a significant year-over-year growth of 960,000.
The company's AUC stood at $135.0 billion at May's end, up 9% from April 2024 and showing a substantial 65% increase from the same period last year. Robinhood also observed a 35% annualized growth rate in net deposits for May, amounting to $3.6 billion relative to April's AUC. Over the past twelve months, net deposits totaled $29.4 billion, representing an annual growth rate of 36% compared to May 2023 AUC.
Trading volumes for equity notional and options contracts experienced an upward trend, with equity notional trading volumes at $86.8 billion, a 23% increase from April and a 76% surge year-over-year. Options contracts traded were 131.9 million, up 4% from April and 35% from the previous year. However, crypto notional trading volumes saw a decline of 30% from April, despite being up 238% from May 2023, totaling $7.1 billion.
The company also reported growth in margin balances, which were $4.5 billion at the end of May, a 10% increase from April and a 45% rise year-over-year. Total cash sweep balances increased to $20.3 billion, up 6% from April and an 81% increase from the previous year. Additionally, total securities lending revenue in May was $23 million, showing a 10% increase from April and a 53% rise compared to the same month last year.
Robinhood continues its mission to democratize finance, offering commission-free U.S. stock trading, crypto trading in select EU jurisdictions, and educational content through Robinhood Learn. The company communicates material information to the public through its Investor Relations and Newsroom web pages, in compliance with SEC's Regulation Fair Disclosure.
In other recent news, Robinhood Markets is set to acquire global cryptocurrency exchange Bitstamp, a move that will facilitate the company's expansion into international markets and introduce its first institutional business offerings. This deal is expected to close in the first half of 2025, subject to customary closing conditions and regulatory approvals. The acquisition is anticipated to be valued at approximately $200 million in cash.
In response to this development, Mizuho maintained its Buy rating on Robinhood's stock, viewing the acquisition as a strategic expansion that could potentially contribute approximately $25-50 million in annual revenues for Robinhood. The firm expects that the integration of Bitstamp's capabilities and reach into Robinhood's existing services will bolster the company's position in the competitive financial trading and cryptocurrency sectors.
Meanwhile, Cathie Wood's ARK ETFs reported a significant sell-off of Robinhood shares, while increasing their stakes in various biotech and tech companies. ARK divested a substantial number of Robinhood shares, resulting in a cash inflow of approximately $7,181,906. On the buying side, ARK's most substantial investments were in UiPath (NYSE:PATH) Inc and Amgen Inc (NASDAQ:AMGN), suggesting a growing confidence in these companies.
InvestingPro Insights
As Robinhood Markets, Inc. (NASDAQ: HOOD) demonstrates robust growth in its monthly operating data, with notable increases in funded customers and assets under custody, investors may find the following insights from InvestingPro particularly relevant. The company's AUC and trading volumes are on the rise, indicative of a growing customer base and increased trading activity.
InvestingPro data highlights a significant 12.7% return over the last week and an impressive 100% return over the last six months, signaling strong market performance and investor confidence in Robinhood's growth trajectory. Additionally, analysts have been optimistic about the company's future, with three analysts revising their earnings upwards for the upcoming period and projecting profitability for the year. This aligns with the company's year-over-year revenue growth of 36.13% and a quarterly increase of 40.14%, as seen in its last twelve months as of Q1 2024.
Despite these positive trends, Robinhood is trading at a high earnings multiple, with a P/E ratio of 162.17, which is relatively high in comparison to near-term earnings growth. This could suggest that the stock's current price is reflective of high future earnings expectations from investors. It's also worth noting that Robinhood's stock price movements have been quite volatile, which may be a point of consideration for risk-averse investors.
For those seeking further insights, InvestingPro offers additional tips on Robinhood, including detailed analyses of the company's financial health, trading at a high P/E ratio relative to near-term earnings growth, and its position near a 52-week high. To access these valuable tips and more, visit https://www.investing.com/pro/HOOD and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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