On Thursday, Goldman Sachs (NYSE:GS) reaffirmed its Buy rating and a $48.00 price target for Robinhood Markets (NASDAQ:HOOD), following the release of the company's November metrics.
The stock has been a stellar performer, delivering an impressive 225% return over the past year according to InvestingPro data. The report highlighted significant increases in equity and cryptocurrency trading volumes month-over-month, attributed to the heightened trading activity after the US election.
Robinhood also experienced a notable 22% month-over-month growth in end-of-period assets under custody (AUC), translating to over 260% annualized AUC growth for the month. Margin balances saw a 10% increase from the previous month, exceeding the historical peak set in November 2021.
The brokerage firm's funded accounts also grew by 2% month-over-month, reaching 24.8 million. This uptick in funded accounts is seen as a positive indicator of customer growth and engagement. With a market capitalization of $33.45 billion and robust revenue growth of 36% year-over-year, Robinhood's expansion continues to impress.
InvestingPro analysis suggests the stock is currently trading above its Fair Value, with 12 more exclusive insights available to subscribers. Goldman Sachs noted that based on the November run rate, Robinhood's fourth-quarter trading revenue is projected to be 51% higher than the consensus estimates. The growth is significant across all three of Robinhood's trading products compared to the previous quarter, as indicated by the metrics released prior to the investor day on October 4, 2024.
Daily average revenue trades (DARTs) showed healthy quarter-over-quarter increases across equity, options, and cryptocurrency products. Additionally, the order sizes in November grew by 10%, 4%, and 48% month-over-month for equity, options, and crypto, respectively.
Goldman Sachs concluded its assessment by expressing a positive outlook on Robinhood's asset gathering and customer activity levels, which are believed to position the company well for the fourth quarter of 2024. The company maintains an impressive 86.5% gross profit margin, and analysts expect strong earnings growth, as revealed in the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Robinhood Markets has seen significant attention from various analyst firms.
Barclays (LON:BARC) upgraded Robinhood's shares to Overweight, citing a positive outlook on cryptocurrency and expansion. Goldman Sachs also upgraded Robinhood to a 'Buy' rating, citing an expected 14% annual revenue growth. However, Keefe, Bruyette & Woods maintained a 'Market Perform' rating, reflecting Robinhood's strategic goals and robust financial performance.
Mizuho (NYSE:MFG) Securities 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. Piper Sandler also expressed confidence in Robinhood, maintaining an 'Overweight' rating, highlighting the company's strong brand recognition and product roadmap as indicators for future growth.
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. These are recent developments.
Lastly, Robinhood's chief legal and compliance officer, Dan Gallagher, is being considered for the chair of the Securities and Exchange Commission.
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