Should You Buy, Sell, or Hold HOOD Stock as Robinhood Gets Into Wealth Management and Banking?
Robinhood Markets (HOOD) is a digital financial services firm based in the U.S. that allows its users to invest in stocks, options, exchange-traded funds (ETFs), and cryptocurrencies. Incorporated in 2013, the company now has a user base of 25.2 million funded accounts.
Robinhood's stock has seen tremendous growth in the last couple of years. Shares are up 370% over the past two years, up more than 104% over the past 52 weeks, and up 10.3% in the year to date. However, shares have not been immune from the broader market selloff, and are down nearly 40% from their 52-week high.
Robinhood Beats Analysts
Robinhood reported its fourth-quarter results last month on Feb. 12 posting a net profit of $916 million, a 10X increase from the same quarter last year. This translates to a profit of $1.01 per diluted share, coming in against analysts' estimates of $0.44 per share. Revenue for the quarter totaled$1.01 billion, up 115% year-over-year while beating the $941.4 million estimate.
For fintech companies like Robinhood, metrics like average revenue per user (ARPU) are critical. Robinhood doubled its ARPU in the quarter to $164.
Robinhood Expands to Wealth Management and Banking
Robinhood announced on Wednesday, March 26 its entry into the wealth management and banking industry. Its wealth management branch will be called 'Robinhood Strategies' and will cost users a 0.25% annual charge with a ceiling of $250 for its 'Gold' members.
Robinhood management sees the move as a chance to 'democratize' personalized wealth management instead of reserving it for affluent clients. It is also a chance to reach retail investors who are increasingly seeking professional advice.
The company will roll out its banking services later this year with solutions covering real estate, tax advice, and benefits including tickets to the Oscars and the Met Gala.
Additionally, Robinhood will also release an AI investment tool in late 2025 aiming to provide real-time analytics and insights.
Analyst Ratings on HOOD
Analysts are optimistic about the financial services company and have a 'Moderate Buy' rating with a mean price target of $65.63, reflecting upside potential of 56% upside from current prices.
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Globe and Mail
11 hours ago
- Globe and Mail
Robinhood May Enter S&P 500 Club: A Win for Retail Investors?
Robinhood Markets Inc. HOOD is poised for potential inclusion in the S&P 500 Index, with an official announcement expected tomorrow. The index's quarterly rebalancing occurs later this month. Per the latest guidelines for the stocks' inclusion in the S&P 500 index, companies must have a market value of at least $20.5 billion and be profitable on a GAAP basis for the past four quarters cumulatively and in the most recent quarter. HOOD fits the bill. It has a market capitalization of almost $63 billion and has been consistently profitable over the trailing four quarters. Inclusion in the S&P 500 is significant, as it often leads to increased demand from index funds and passive investors who aim to replicate the index's performance. This heightened demand can boost a company's stock price and liquidity. For Robinhood, such inclusion would not only validate its growth trajectory but also enhance its visibility and credibility in the financial markets. However, the company must navigate potential challenges, including market volatility and regulatory scrutiny, especially given its involvement in cryptocurrency trading. HOOD's recent stock performance has been impressive, with a 94% rally this year. This has been driven by the expansion of its product suite, acquisitions, and favorable developments in the cryptocurrency space. Last month, Robinhood's competitor, Coinbase Global COIN, joined the S&P 500 Index. In the week following the announcement of its inclusion in the index, Coinbase shares soared 33.7% despite the news of a hack and regulatory scrutiny. America's largest registered cryptocurrency exchange, Coinbase, is well-placed to capitalize on heightened crypto market volatility and rising asset prices. Another HOOD peer that could become a part of the index this time is the global electronic broker, Interactive Brokers IBKR. With a market cap of approximately $87 billion, Interactive Brokers has been witnessing solid improvement in profitability as retail market participation continues to rise. This year, Interactive Brokers' stock has gained 16.6%. Robinhood's potential inclusion in the S&P 500 could be seen as a triumph, symbolizing the growing influence of retail trading platforms in mainstream finance. It underscores the shift towards democratized investing, where individual investors have greater access to financial markets. Robinhood's Valuation and Estimate Analysis Given the solid price performance, HOOD shares are currently trading at a massive premium to the industry. The company has a forward price-to-earnings (P/E) of 54.33X compared with the industry average of 13.61X. Moreover, the Zacks Consensus Estimate for Robinhood's 2025 and 2026 earnings reflect a growth of 11.9% and 20.5%, respectively, on a year-over-year. In the past month, earnings estimates for 2025 has remained unchanged, while for 2026, it has moved marginally upward. Image Source: Zacks Investment Research HOOD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report This article originally published on Zacks Investment Research (
Globe and Mail
4 days ago
- Globe and Mail
Robinhood Markets Hits 52-Week High: Should You Buy the Stock Now?
Robinhood Markets, Inc. HOOD touched a 52-week high of $68.20 during yesterday's trading session. Over the past three months, the stock has gained 47.1%, outperforming the industry, the Zacks Finance Sector, the S&P 500 index and its close peers — The Charles Schwab Corporation SCHW and LPL Financial Holdings Inc. LPLA. Does the HOOD stock have more upside left despite hitting a 52-week high? Let us find out. Factors Likely to Drive Robinhood Stock Volatility Amid Tariff Policy Concerns to Drive Revenues: On Feb. 13, President Donald Trump announced a plan for 'reciprocal' tariffs to reduce the fiscal trade deficit. This move brought concerns regarding potential tariff wars, leading to higher market volatility. Though the situation has pacified to some extent in light of a pause on tariffs as countries negotiate, the uncertainty concerns continue to linger surrounding the impact of tariff policies. This is expected to contribute to the increase in Robinhood's transaction-based revenues, due to heightened volatility and increased market participation. Robinhood's total net revenues have witnessed a compound annual growth rate (CAGR) of 60.4% over the past five years (2019-2024), with transaction-based revenues recording a CAGR of 57.3%. The momentum continued for both metrics in the first quarter of 2025. Given the company's focus on transaction-based revenues combined with the commission-free model and ongoing volatility in the markets, its revenues are likely to move higher. Further, the Trump administration has been favorable to cryptocurrency as regulators have been easing norms and regulations for firms to venture into digital assets. Moreover, in March 2025, Trump signed an executive order to establish a strategic crypto reserve. This will likely support Robinhood's cryptocurrency revenues as new investors will be attracted to cryptocurrencies to boost their returns and leverage the benefit of diversification as an asset class as well. In the first three months of 2025, the company's cryptocurrency revenues were $252 million, constituting 27.2% of total net revenues. Over five years (2019-2024), the metric witnessed a CAGR of 140.3%. Robinhood acquired Bitstamp yesterday. Bitstamp's core spot exchange, which features more than 85 tradable assets, coupled with its popularity in Europe and Asia, will significantly enhance Robinhood's crypto offerings. Also, in May 2025, Robinhood agreed to acquire WonderFi, a leader in digital asset products and services in Canada. This move aims to capitalize on rising crypto demand among Canada's investors. Currently, Robinhood offers trading in more than 30 cryptocurrencies on its app. Business Diversification Efforts: Robinhood became extremely popular among younger generations, riding on the meme stock wave in early 2021. Nonetheless, since its IPO in July 2021, the company has taken several steps to evolve from merely being a brokerage firm to a more mature and diversified entity, striving to become a one-stop shop for building generational wealth. Last week, the company rolled out Robinhood Legend, a browser-based desktop trading platform, in the United Kingdom, after launching the same in the United States in October 2024. In March 2025, Robinhood launched a prediction markets hub. Further, in the same month, the company launched Robinhood Strategies, Robinhood Banking and Robinhood Cortex, a suite of new features, to boost the wealth management offerings for its Robinhood Gold members. In January 2025, the company launched Futures, while in December 2024, it introduced the Tax Lots feature for investors. In February 2025, Robinhood acquired TradePMR to expand into the registered investment advisers custody market. In July 2024, Robinhood acquired Pluto Capital Inc. With the integration of the latter's advanced capabilities, the former is set to revolutionize the investment experience for its users. Additionally, the company launched its first-ever credit card in March 2024. Thus, rapid product innovations through vertical integration will likely expand HOOD's client base, enabling greater operating leverage and paving the way for sustained profitability. Similarly, in April 2025, Schwab introduced Alternative Investments Select, a new alternative investments platform, available to eligible retail clients having more than $5 million in household assets with the platform. HOOD Rewards Shareholders: In April, Robinhood announced an additional share buyback plan worth $500 million. This plan supplemented the previous authorization of $1 billion announced in May 2024, extending the total authorization to $1.5 billion. While the plan does not have an expiration date, the company expects to buy back shares within roughly two years. As of April 30, 2025, roughly $921 million worth of authorization remained available for repurchase. Robinhood is on solid ground, with significant cash reserves. As of March 31, 2025, it reported cash and cash equivalents of $4.4 billion. Bullish Analyst Sentiments Over the past month, the Zacks Consensus Estimate for earnings of $1.22 and $1.47 per share for 2025 and 2026, respectively, moved 1.7% and 3.5% upward. The projected figures imply growth of 11.9% for 2025 and 20.5% for 2026. Estimate Revision Trend Robinhood's Regulatory Headwinds Robinhood operates in a highly regulated industry and falls under the scrutiny of numerous authorities. This exposes the company to regulatory risks, resulting in hefty fines and restrictions that may affect its profitability. In March 2025, Robinhood's units agreed to pay $26 million to settle Financial Industry Regulatory Authority allegations for failing to respond to red flags about potential misconduct and not verifying the identities of thousands of customers. In January 2025, the company agreed to pay a $45 million fine for violating more than 10 securities law provisions. Previously, in September 2024, the company faced a $3.9 million penalty to settle crypto withdrawal failures. In 2023, the company faced defeat in proceedings at the Massachusetts Supreme Judicial Court regarding the supervision of product features and marketing strategies and paid a fine of $7.5 million. These hefty fines have made investors cautious about Robinhood's operations and the sufficient internal control procedures. Likewise, in January 2025, LPL Financial agreed to pay a civil penalty of $18 million and implement improvements to its anti-money laundering ('AML') policies and procedures. The Securities and Exchange Commission accused LPL Financial of numerous failures regarding its AML program. Parting Thoughts on HOOD Stock Solid revenue growth, organic and inorganic expansion initiatives to diversify the business and a strong balance sheet will aid Robinhood's financials. Moreover, tariff policy concerns and easier regulations for digital asset businesses complement the company's efforts to improve its top line through product diversification. However, HOOD's regulatory headwinds and rising operating expenses are major concerns. Further, foraying into the banking business amid intense competition keeps investors cautious about the company's success. Hence, investors should keep an eye on how Robinhood confronts the challenging backdrop. HOOD stock is a cautious bet for investors now. Those who already own it can hold for now for a robust long-term return. HOOD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. 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Globe and Mail
19-05-2025
- Globe and Mail
HOOD vs. IBKR: Which Fintech Broker is Poised for More Growth?
HOOD and Interactive Brokers Group IBKR are prominent online brokerage players offering commission-free trading platforms. Robinhood appeals to newer, mobile-first retail investors, while Interactive Brokers serves more advanced traders with its comprehensive tools. With the stock markets witnessing massive volatility and client activity, HOOD and IBKR are expected to benefit from increased trading activities. As such, investors are bullish on both. This year, shares of HOOD have soared 65.8%, while Interactive Brokers is up 18.4%. Also, stocks have fared better than the industry, the Zacks Finance sector and the S&P 500 Index in the same time frame. HOOD & IBKR YTD Price Performance So, the question arises: which brokerage stock — Robinhood or Interactive Brokers — offers greater upside in the evolving trading market? Let's break down their fundamentals, financial performance, growth prospects and more before taking any decision. The Case for Robinhood Robinhood became extremely popular among younger generations in early 2021, riding on the meme stock wave. Nonetheless, since its IPO in July 2021, a lot has happened on the business front. It has evolved from a brokerage firm primarily trading in digital assets to a more mature and diversified entity, striving to become a one-stop shop for building generational wealth. In this context, HOOD has launched several initiatives to attract more clients and strengthen its market share. Some notable ones are Robinhood Strategies, Robinhood Banking and Robinhood Cortex to boost the wealth management offerings; the prediction markets hub; a credit card and a desktop trading platform. Additionally, Robinhood is expanding via strategic acquisitions, which are helping it foray into new businesses and complement existing ones. On Tuesday, it announced an agreement to buy Canada-based WonderFi Technologies Inc. in a C$250 million all-cash deal, which will help deepen its presence in the Canadian digital asset market. In February 2025, it completed the $300 million acquisition of TradePMR, a custodial and portfolio management platform specializing in services for Registered Investment Advisors. Also, in July 2024, Robinhood acquired Pluto Capital Inc. With the integration of Pluto's advanced capabilities, the company has revolutionized the investment experience for its users. Further, the impending buyout of Bitstamp (announced in June 2024), a globally recognized cryptocurrency exchange (featuring more than 85 tradable assets and popular in Europe and Asia), will significantly enhance the company's crypto offerings. Hence, these efforts reflect HOOD's ambition to become a full-spectrum financial services provider. HOOD Sales Estimates The Case for Interactive Brokers Interactive Brokers' technological superiority remains one of its strongest aspects. The company processes trades in stocks, futures, options and forex on more than 150 exchanges across several countries and currencies. Superior technology usage has kept IBKR's compensation expense relative to net revenues (10.8% in the first quarter of 2025) below its industry peers. Further, the company has been emphasizing developing proprietary software to automate broker-dealer functions, leading to a steady rise in revenues. Interactive Brokers is expanding globally with a series of strategic moves. Earlier this month, it extended trading hours for Forecast Contracts to nearly 24 hours, after having launched them in Canada. In the U.K., it added mutual funds to its ISA offerings, enhancing tax-efficient investing. IBKR also introduced PEA accounts in France and expanded mobile trading via GlobalTrader. Other innovations include almost 24 hours of Overnight Trading on U.S. stocks and ETFs, crypto trading through Paxos with low fees and the launch of IBKR Desktop, a next-gen trading platform for Windows and Mac, underscoring its focus on advanced, global trading solutions. The company's technological superiority, combined with easier regulations to improve product velocity, will support its net revenues through higher client acquisitions. Net revenues are also expected to strengthen further in the quarters ahead, given the solid Daily Average Revenue Trades (DARTs) numbers and robust trading backdrop driven by higher market participation. IBKR Sales Estimates Image Source: Zacks Investment Research How Do Estimates Compare for HOOD & IBKR? The Zacks Consensus Estimate for HOOD's 2025 and 2026 earnings indicates an 11.9% and 19.4% rise for 2025 and 2026, respectively. Over the past month, earnings estimates for 2025 have remained unchanged, while for 2026, the same have been revised upward. Earnings Trend Image Source: Zacks Investment Research On the contrary, analysts are less optimistic about IBKR's prospects. The consensus mark for earnings suggests 0.4% and 7% growth for 2025 and 2026, respectively. Earnings estimates for both years have been revised lower over the past 30 days. Earnings Trend Image Source: Zacks Investment Research Hence, on earnings growth prospects, HOOD clearly has an edge over Interactive Brokers. Robinhood & Interactive Brokers: Valuation & Other Comparisons Valuation-wise, HOOD is currently trading at the 12-month forward price-to-earnings (P/E) of 47.17X. The IBKR stock, on the other hand, is currently trading at the 12-month trailing P/TB of 28.86X. Further, both are trading at a premium to the industry average of 13.82X. P/E F12M While Robinhood commands a premium over Interactive Brokers, its valuation is justified, given its superior growth trajectory. Additionally, HOOD's return on equity (ROE) of 15.42% is way above IBKR's 4.97%. HOOD also outscores the industry ROE of 11.97%. This reflects Robinhood's efficient use of shareholder funds to generate profits. ROE HOOD & IBKR: Which Stock Indicates Long-Term Gains? HOOD has undergone a significant transformation since its IPO, evolving from a disruptive trading app into a comprehensive financial services platform. Through strategic acquisitions, it is aggressively expanding its product suite and global reach. It's also investing in advanced tools like Robinhood Cortex and Robinhood Strategies, targeting a broader investor base. These innovations, paired with a robust ROE and accelerating earnings and sales growth estimates through 2026, suggest strong long-term upside potential. On the other hand, Interactive Brokers remains a dominant, tech-driven brokerage favored by professional and institutional investors. Its global reach, low-cost model and powerful trading tools continue to support consistent revenue growth. However, while the company's innovation in areas like Forecast Contracts, GlobalTrader and IBKR Desktop is impressive, its earnings outlook is more muted, with only modest growth expected in the next two years. Combined with a lower ROE and downward revisions to earnings estimates, this suggests that while IBKR is a stable, well-run business, it may not match HOOD's upside potential in a growth-focused portfolio. Thus, Robinhood appears to be the better long-term investment for solid returns. At present, Robinhood and Interactive Brokers carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report
