Robinhood Markets shares HOOD rose on Wednesday as analysts assessed the trading platform’s expansion beyond its traditional brokerage business, with new financial products and prediction markets emerging as potential growth drivers.
The stock gained around 4.34% to $102.47 in trading.
Despite the advance, shares have fallen 12% this year, putting them on track for their weakest annual performance since 2022.
However, the stock has recovered 52% since reaching a 52-week low of $65.15 in March, according to Dow Jones Market Data.
The latest analyst updates reflect differing views on Robinhood’s growth prospects, valuation, and ability to compete as it broadens its financial services offering.
Rosenblatt sees potential in Robinhood’s expanding platform
Rosenblatt initiated coverage of Robinhood with a Buy rating and a $135 price target, implying roughly 37% upside from Tuesday’s closing price of $98.21.
Analyst Chris Brendler described the company as a “generational growth story” that “deserves premium valuation.”
He wrote that “few companies can claim to have changed an entire industry, but Robinhood can.”
Brendler argued that investors may be underestimating the company’s evolution from a commission-free trading app into a broader financial platform.
He pointed to its increasingly affluent customer base, expanding range of financial products and opportunities for international growth.
Rosenblatt also said Robinhood’s core brokerage business continues to gain market share despite its scale.
The firm added that potential Pattern Day Trading reform could remove a constraint affecting some of the platform’s most valuable customers.
Robinhood has also announced new features, including round-the-clock US stock trading, weekend trading, AI trading agents and prediction-market contracts linked to certain corporate earnings metrics.
JPMorgan raises price target but flags competition
JPMorgan raised its price target on Robinhood to $115 from $103 while maintaining a Neutral rating.
The firm also increased its third-quarter adjusted earnings estimate to 57 cents per share from 46 cents, citing record equity and options trading volumes.
The bank identified prediction markets as an increasingly important growth driver and noted the company’s progress in moving beyond its association with meme-stock trading.
However, JPMorgan questioned the long-term profitability of Robinhood’s relatively small customer accounts.
It also warned that competition from traditional brokerages and cryptocurrency platforms could challenge the company’s expansion.
Reflecting those concerns, the analysts lowered the earnings multiple used to value Robinhood to 32 times from 35 times.
Perpetual stock futures could attract new deposits
Mizuho analysts highlighted another potential growth opportunity in perpetual stock futures, which allow investors to speculate on share-price movements without owning the underlying stock.
In a survey of more than 600 Robinhood users, 94% said they would likely trade the contracts if they became available.
Around 84% said they would use mostly or entirely new money, suggesting the product could bring additional deposits onto the platform rather than redirect existing stock investments.
Trading activity has remained substantial across Robinhood’s businesses.
Through September 24, equity notional trading volume stood at about $267 billion, while options trading reached approximately 234 million contracts.
Crypto notional volume was around $17 billion, split between roughly $7 billion on the Robinhood app and $10 billion at Bitstamp.
Event-contract trading totalled about 4.4 billion contracts.
Robinhood is scheduled to report third-quarter earnings on October 27, giving investors an opportunity to assess trading activity and the performance of its expanding product range.
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