Robinhood Markets, the trading app known for its commission-free trading and role in the 2021 meme stock frenzy, is expected to report its highest quarterly revenue in nearly three years, driven by a steady rebound in equity markets and crypto trading.
According to an initial report from Reuters, there has been a resurgence in global markets fueled by bets on interest rate cuts, has attracted traders back to the platform, resulting in higher transaction-based revenue for the retail investor-focused brokerage.
Robinhood’s shares have surged 58% in the first three months of the year, marking the sharpest quarterly stock increase since its listing.
According to research firm Apptopia, Robinhood’s daily active users jumped 65% in March compared to the previous year, while total new mobile app downloads soared 94% during the same period. The company’s net interest revenue, the biggest driver of its top line, is expected to rise 24% to $258.24 billion in the first quarter, as reported by LSEG data.
Robinhood’s assets under custody (AUC) exceeded $100 billion for the second consecutive month in February, and the company reported a surprise profit in the final quarter of 2023, setting its sights on profitable growth in 2024. Analysts from JP Morgan forecast a 24% increase in revenue to $548.61 million for the first quarter, with crypto trading revenue likely to more than double from the previous year to $80 million.
Despite the positive outlook, the average recommendation of 17 brokerages covering Robinhood remains a “hold.” The median price target for the company is $19, a 65% increase from three months ago. Robinhood currently trades at 64.01 times its forward earnings estimate, significantly higher than the industry median of 10.97. Although the stock hit a more than two-year high in late March, it has lost more than half its value since its July 2021 market debut.
- The projection comes as Robinhood faces pressure from the SEC for alleged violations of securities laws. Robinhood will release its Q1 results Wednesday.