Key Points:
- Robinhood’s shares surged by 13% following a fourth-quarter report that exceeded expectations.
- Major financial institutions, including JPMorgan, Citi, and Bernstein, have updated their price targets for the stock.
- The trading platform highlighted a record revenue of $358 million from crypto transactions, signaling a growing reliance on digital assets.
Robinhood (HOOD) saw its stock jump during pre-market trading after announcing its fourth-quarter earnings, which surpassed Wall Street forecasts due to a significant rise in revenue from cryptocurrency trading. According to JPMorgan’s report, the company generated $358 million from crypto transactions, marking its highest earnings from digital trading to date.
JPMorgan has increased its price target for Robinhood stocks from $39 to $45 while maintaining a neutral rating, whereas Citi lifted its target to $60, previously at $45. Bernstein has notably more than doubled its price target from $51 to $105 while retaining an outperform rating on the shares.
The surge in stock prices came after the earnings report was released late Wednesday, leading to an increase to $63.20 during early trading on Thursday. Robinhood revealed that its total revenue saw a 115% growth compared to the previous year, reaching $1.01 billion, significantly exceeding analyst expectations of $945.8 million.
Crypto revenue accounted for about 10%-20% of the company’s total revenue. The fiscal boost was largely attributed to a robust 393% growth in notional trading volumes. The company aims to expand its crypto operations, planning to introduce additional tokens and improve its digital wallet offerings, amongst other strategic moves.
“Management seeks to add more tokens, strengthen its wallet offering, add an order book with exchange routing functionality, integrate Bitstamp, and explore tokenization longer-term,” a research note suggested.
Citi has praised Robinhood’s performance, noting the favorable trends since the start of the year, and while the outlook has improved, they recommend waiting for a more opportune entry point for investment. Bernstein expressed confidence in Robinhood, calling it one of the best options for investors in the digital asset space, anticipating continued momentum.
Read more: Robinhood’s Big Earnings Beat Could Bode Well for Coinbase
