Robinhood Markets, Inc. (NASDAQ: $HOOD) is an online commission-free investment platform that offers access to stocks, cryptocurrency, ETFs, and options trading via its website and mobile app.
Robinhood stock jumped 11%+ on Thursday, March 14, during the pre-market session on positive February operating data.
Robinhood Markets Releases February Data
February 20204 was an impressive month for Robinhood, with the company reporting growth in critical areas, including assets under custody, funded customers, and trading volumes.
The company reported that as of the end of February, it had 23.6 million funded customers, an increase of nearly 130,000 since January 2024. The company saw its assets under custody rise 16% to $118.7 billion from January and 59% Y/Y.
Robinhood reported that net deposits in February stood at $3.6 billion, a 42% increase compared to January 2024, while over the past 12 months, total net deposits were $21.6 billion, a Y/Y increase of 29% compared to February 2023.
The company also reported a rise in trading volumes in all assets classes compared to January 2024, with Equity Notional Trading Volumes up 36% to $80.9 billion, Options Contracts rose 12% to $119.1 billion, while Crypto Notional Trading Volumes rose 10% to $6.5 billion.
On a year-over-year basis, the increases were even more impressive. Crypto trading was up 86%, stock trading was up 41%, and options trading was up 33%.
Robinhood Chief Legal Officer Offloads Stock
In a recent SEC filing, it was revealed that the Robinhood Chief Legal Officer, Gallagher Daniel Martin Jr, sold 12,500 shares at $15.9 per share on March 5, 2024. Such sales by insiders at any company always capture the attention of the market.
However, given the growth of the stock in the past 12 months, it is not surprising. It could be part of a strategy to diversify his portfolio. In total, Robinhood insiders hold 8.11% of all HOOD shares.
Robinhood Adds USDC Listing for EU Traders
On Thursday, March 14, 2024, Robinhood Markets announced on its X account that it had added support for its EU customers. The listing will comes with reward of up to 10% for USDC held natively in the Robinhood crypto account.
Robinhood (HOOD) Stock Performance
Following the release of the February operating data, Robinhood saw the stock rise 11.53% in pre-market trading. At the close of the Wednesday, March 13, 2024, regular trading session, the stock was up 4.70% to $17.16 per share, in line with a general upward trend for the stock in the past few months.
Year-to-date, HOOD stock is up around 35% and up 84.32% in the past 12 months, beating the S&P 500’s 30.43% gain in the same period. Its focus on growing funded customers, improving the growth of net deposits, and expanding its market share via the launch of new products has helped propel its performance in recent months.
During the regular morning session, HOOD managed to hold on to most of its pre-market gains rising +7.52% to $18.52 per share a few minutes after the opening bell.
HOOD Stock Forecast
Despite the bullish momentum of HOOD in the past few months, the stock has an overall hold rating, with four Buy ratings, six Hold, and three Sell. The average price target for the stock in the next 12 months is $15.58, a potential 9.21% downside. It has a broad range of targets, with the highest being $30 while the lowest is $11.
Should You Add HOOD To Your Portfolio?
The main gripe that analysts have with Robinhood is that it is nowhere near profitability. In its most recent financial results, the company had a profit margin of -29.01% on revenue of $1.86 billion. While it has a great balance sheet with $10.89 billion in total cash, the company’s operating expenses remain quite high.
Analysts also point out that Robinhood’s revenue growth has been driven by high-interest rates on its own cash pile and customer deposits. However, with the Fed projecting that it could cut rates in 2024, it could devastate its revenue growth.
Despite this, Robinhood has demonstrated its ability to grow customer activity on its platform, which could yield positive results in the long term. Based on this assessment, HOOD stock could be a great addition to your portfolio in the near term. However, it is essential to keep an eye on other macroeconomic facts, such as Fed rates, to determine its long-term trajectory.
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