Robinhood Markets (HOOD) shares advanced on Wednesday as analysts weighed the trading platform's push into new financial products and prediction markets, viewing these as potential growth engines beyond its traditional brokerage business. The stock climbed approximately 4.34% to $102.47 in regular trading.
Despite the daily gain, shares have declined 12% year-to-date, putting the stock on pace for its weakest annual performance since 2022. However, the shares have rebounded 52% from a 52-week low of $65.15 reached in March, according to Dow Jones Market Data.
Rosenblatt Initiates with Buy, Sees 'Generational Growth Story'
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," adding that "few companies can claim to have changed an entire industry, but Robinhood can."
Brendler argued that investors may be underestimating Robinhood's evolution from a commission-free trading app into a broader financial platform. He pointed to its increasingly affluent customer base, expanding product lineup, and international growth opportunities. Rosenblatt also noted that Robinhood's core brokerage continues to gain market share despite its scale, and that potential Pattern Day Trading reform could remove a constraint affecting some of the platform's most active customers.
Robinhood has recently introduced features such as 24-hour US stock trading, weekend trading, AI trading agents, and prediction-market contracts tied to corporate earnings metrics.
JPMorgan Raises Target but Flags Competitive Pressures
JPMorgan raised its price target on Robinhood to $115 from $103 while maintaining a Neutral rating. The firm also lifted 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 acknowledged the company's progress in moving beyond its meme-stock association.
However, JPMorgan questioned the long-term profitability of Robinhood's relatively small customer accounts and warned that competition from traditional brokerages and crypto platforms could challenge 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 avenue: perpetual stock futures, which allow investors to speculate on share-price movements without owning the underlying stock. In a survey of over 600 Robinhood users, 94% said they would likely trade the contracts if available. About 84% indicated 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 remains robust 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 totaled 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.
This article is for informational purposes only and does not constitute financial advice.
