Robinhood Surprises Experts with Net Profit: Analysis and Forecast of Robinhood Markets Stock
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Net profit of Robinhood Markets Inс. (NASDAQ: HOOD) reached 30 million USD in Q4 2023, surprising Wall Street analysts who had projected another loss-making quarter and increasing the company’s share price by 15.2% to 13.65 USD.
On 19 February 2024, we analysed Robinhood Markets Inс.’s business model, examined its financial performance, conducted a technical stock analysis, and assessed its potential for further growth. We also discovered expert expectations for the shares in 2024 and identified which funds are actively buying them.
About Robinhood Markets
Robinhood Markets Inc. is an American financial technology company established in 2013 by Vlad Tenev and Baiju Bhatt.
It provides an online platform for trading stocks, cryptocurrencies, and other financial instruments.
One of the product’s features is commission-free trading, which immediately attracted the attention of beginner investors and those willing to lower their trading costs. Additionally, the platform made the stock market more accessible to a wide range of people by offering trading in fractional shares, enabling even small amounts to be invested in stocks of large companies.
Robinhood Market’s business model
Robinhood Markets Inc.’s business model is based on attracting a broad audience, providing users with accessible financial instruments, and income diversification.
Robinhood Markets Inc.’s revenue streams include:
- Rebates from market makers and trading platforms. This involves remunerations from brokers and stock exchanges to which Robinhood Markets Inc. routes clients’ orders.
- Stock borrowing. The company lends shares to clients willing to capitalise on selling them and charges a fee.
- Interest on bank deposits. The corporation transfers idle funds to deposit accounts with partner banks and receives interest depending on deposit periods and amounts.
- Cash Card service. Robinhood Markets Inc. offers Mastercard bank cards to its clients and receives interest for each transaction via these cards and a part of cashback.
- Robinhood Gold subscription. The company sells access to a premium version of its service with extra features.
Analysis of Robinhood Markets’ financial position
Robinhood Markets Q4 2023 results compared to Q4 2022 statistics:
- Revenue: +23.94%, up to 471 billion USD, forecasted at 456.33 billion USD
- Net profit: 30 million USD versus a loss of 166 million USD
- Earnings per share: 0.03 USD versus a loss of 0.19 USD, with a forecast of a loss of 0.01 USD
- Number of clients: +420 thousand, reaching 23.4 million
- Clients’ deposits: +21%, reaching 4.6 billion USD
- Robinhood Gold subscribers: +25%, reaching 1.42 million
- Average revenue per user: +23%, reaching 81 USD
Robinhood Markets 2023 results compared to 2022 statistics:
- Revenue: +37.33%, reaching 1.87 billion USD
- Net loss: −47.37%, reaching 541 million USD
- Loss per share: −47.86% USD, reaching 0.61 USD
Financial forecast for 2024
Robinhood Markets Inc.’s management expects higher profitability and further growth in 2024 amid business expansion and new product introductions. The forecast is as follows:
- More than 20% deposit growth
- A rise in Robinhood Gold subscriptions
- A double-digit increase in trading market share
- Active introduction of new products
- Diversification of the company’s revenue model
- Workforce optimisation
According to the transcripts, the volume of deposits increased to 4 billion USD in January 2024, marking the highest value since 2021. Q1 2024 revenue is expected to reach 427 million USD.
Advantages of Robinhood Markets over its competitors
After its establishment, Robinhood Markets Inc. initially operated only in the US market. In 2019, while the company was authorised by the Financial Conduct Authority (FCA) to operate in the UK, only in November 2023 did it announce the launch of broker services in the UK. On 7 December 2023, the corporation announced its entry into the European market with the Robinhood Crypto cryptocurrency trading app.
According to CEO Vlad Tenev, tens of thousands of international clients await a chance to access the company’s services fully. The Robinhood team is actively exploring markets to expand the list of countries where it can provide brokerage services.
Hedge funds investing in Robinhood Markets stock
Based on data from WhaleWisdom.com, the top 5 hedge funds that made the most significant investments in Robinhood Markets Inc. stock in Q4 2023 are the following:
| Portfolio Amount | Robinhood Shares Purchased in Q4 2023 | Purchase Value | Robinhood Shares in Portfolio | First Purchases of Shares in Robinhood | |
| Two Sigma Advisers LP | 43 billion USD | 2.9 million | 90.4 million USD | 7.1 million | Q2 2022 |
| Two Sigma Investments LP | 44 billion USD | 6.4 million | 86.3 million USD | 6.7 million | Q4 2022 |
| Norges Bank | 572 billion USD | 2.5 million | 84.1 million USD | 6.6 million | Q1 2022 |
| Morgan Stanley | 128 billion USD | 2.7 million | 61.9 million USD | 4.8 million | Q3 2021 |
| JPMorgan Chase & Co | 1.04 billion USD | 3.9 million | 54.1 million USD | 4.2 million | Q3 2021 |
As evident, all these funds began purchasing Robinhood Markets Inc.’s securities in 2021-2022 when the financial company’s quotes dropped below the IPO price and further reached historical lows.
Robinhood Markets stock analysis for 2024
On 4 August 2021, five days after the IPO, Robinhood Markets Inc. stock peaked at 85.00 USD. A protracted decline followed, with the quotes plummeting 92% to 6.80 USD by 17 June 2022. Subsequently, the shares traded within the range of 8 USD-13 USD.
The release of the Q4 2023 earnings report triggered a breakout above the range’s upper boundary. At the time of writing, the stock was trading at 14.00 USD. A breakout of the upper boundary may indicate a high probability of further price growth.
The next resistance level is 16.00 USD. If the price breaks above it, this will likely open up the possibility of a long-term price rise to 34.00 USD. However, it is difficult to imagine this stock price movement without robust financial performance.
Technical analysis of Robinhood Markets Inc*
Expert forecasts for Robinhood Markets stock for 2024
- According to Barchart, three out of 14 analysts rated Robinhood Markets Inc. shares as Strong Buy, eight as Hold, one as Moderate Sell, and two as Strong Sell, with an average price target of 12.27 USD
- Based on the information from MarketBeat, three out of 11 experts designated a Buy rating for the shares, while six gave a Hold recommendation and two assigned a Sell rating, with an average price target of 13.14 USD
- As TipRanks reports, three out of 13 specialists assigned a Buy rating to the financial company’s shares, seven rated it as Hold, and three gave a Sell rating, with an average price target of 13.42 USD
- According to Stock Analysis, one out of 11 analysts rated the stock as Strong Buy, two as Buy, five as Hold, and three as Sell, with the average 12-month stock price forecast of 13.50 USD
Conclusion
In 2023, Robinhood Markets Inc. closed two quarters reporting a net profit, suggesting a trend towards sustained profitability. This positive trajectory may prompt the company to launch share buyback programs or offer dividend payouts in the future.
Moreover, a noteworthy milestone for the corporation in 2023 was its expansion into the international market. It can be assumed that this move may open avenues for expanding the company’s client base and strengthening its financial performance. Consequently, it suggests that Robinhood’s growth potential is yet to be fully realised.
1. What is the current price of Robinhood stock?
The price of Robinhood stock fluctuates throughout each trading day. You can visit the R StocksTrader platform for the most current stock price and type HOOD into the search box.
2. How can I buy Robinhood stock?
To invest in Robinhood Markets stock (HOOD), you can follow these general steps:
1. Open a trading account: choose a brokerage account that suits your needs.
2. Make a deposit: fund your account with the minimum required deposit. For RoboMarkets, the minimum first deposit starts from 100 USD, depending on your account type.
3. Choose the R StocksTrader platform or any other platform offering stocks, and find Robinhood Markets stock.
4. Determine the amount of Robinhood Markets stock you want to buy based on your budget and investment strategy and execute the trade.
5. Monitor your investment: keep track of your Robinhood Markets stock position, analyse performance, and adjust as needed.
For more information, visit the RoboMarkets website here.
3. How did Robinhood conduct its IPO?
Robinhood went public in July 2021, offering shares at a price that valued the company at approximately $32 billion. The IPO was highly anticipated, given Robinhood's role in democratising stock trading and its popularity among retail investors. Since then, the stock has experienced volatility, reflecting both market conditions and the company's financial performance.
4. What factors could affect Robinhood's future growth?
A variety of factors could influence Robinhood's future growth. Looking at things positively, the company could benefit from the increasing adoption of cryptocurrencies, its plans for international expansion and new product launches like retirement accounts, and efforts to boost user engagement on its platform. However, challenges such as a slowdown in user growth, heightened regulatory scrutiny on fintech operations, and stiff competition from both traditional financial institutions and other fintech firms pose significant risks. These dynamics underscore the importance of monitoring these trends and their potential impact on Robinhood's performance and market position.
5. What are the risks of investing in Robinhood?
Investing in Robinhood stock, like any investment, carries risks. Potential risks include market volatility, regulatory changes affecting the fintech and brokerage industries, and competition from other financial services platforms. It is essential to conduct thorough research and consider how an investment in Robinhood fits into your broader investment strategy and risk tolerance.
* – Past performance is not a reliable indicator of future results or future performance.
The material presented and the information contained herein is for information purposes only and in no way should be considered as the provision of investment advice for the purposes of Investment Firms Law 87(I)/2017 of the Republic of Cyprus or any other form of personal advice or recommendation, which relates to certain types of transactions with certain types of financial instruments.
The stock charts in this article are provided by the TradingView platform, which offers a wide range of tools for analysing the financial markets. It is a convenient, high-tech online market data charting service that allows users to perform technical analysis, research financial data, and communicate with other traders and investors.
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