Robinhood stock rockets in 2024 amid booming markets
Innovative Robinhood leads fintech with rapid growth
Robinhood Markets, a pioneer in the fintech industry, experienced a remarkable resurgence in 2024, supported by strong equity and cryptocurrency markets.
The company’s stock has surged an impressive 206% year-to-date, boosting its market capitalization to over $34 billion, according to Invezz. This achievement has prompted investors to consider whether this upward momentum makes Robinhood a worthwhile investment.
Revolutionizing the financial industry and key revenue models
Robinhood revolutionized the financial industry with its commission-free trading model, later adopted by competitors such as Charles Schwab and Interactive Brokers. The platform’s gamification features have particularly appealed to younger audiences, solidifying its reputation as a disruptive force in finance.
The company generates significant revenue through Payment for Order Flow (PFOF), where market makers like Virtu Financial and Citadel pay Robinhood to direct customer orders their way. This model, combined with its subscription service, Robinhood Gold, which charges $5 per month, has fueled its growth. Robinhood Gold offers users attractive returns by investing in government bonds, creating a stable, recurring revenue stream.
Innovation, financial performance, and projections
Innovation remains a key driver of Robinhood's success. Recently, the company launched Robinhood Legend, a browser-based tool designed for day traders, and introduced a credit card offering 3% cashback on purchases. These initiatives have propelled Robinhood’s revenue from $277 million in 2019 to over $2.4 billion in the last twelve months.
In the third quarter of 2024, Robinhood reported a 36% increase in revenue to $637 million, with $319 million derived from transaction-based revenue. Net interest income also climbed to $274 million, driven by higher deposits and favorable interest rates. Additionally, its subscription service gained momentum, with Robinhood Gold subscribers reaching 860,000.
Analysts project that Robinhood’s annual revenue will reach $2.74 billion in 2024 and $3.11 billion in 2025. Earnings per share (EPS) are expected to hit $1.14 this year and $1.30 next year, with the company frequently exceeding forecasts.
Despite its current momentum, Robinhood's reliance on thriving equity and cryptocurrency markets poses a risk. A downturn in these sectors could impact its performance. However, technical analysis suggests that the stock could reach $55.30, supported by a bullish pennant pattern.
As Robinhood continues to innovate and capitalize on market trends, its growth trajectory remains attractive but not without potential challenges.
Notably, Robinhood recently announced the launch of margin investing for its UK clients.
