As Robinhood (HOOD) stock rises 260% over the past year, a longtime Wall Street bear is finally throwing in the towel.
JP Morgan analyst Ken Worthington raised his rating on Robinhood shares from underweight to neutral on Tuesday. Worthington had held an underweight rating on the stock – the equivalent of a sell – since the trading platform company’s high-profile initial public offering (IPO) in July 2021.
Shares of Robinhood fell nearly 1% in premarket trading.
“Our improvement is driven by a continued constructive investment environment, a higher and longer interest rate environment and a more credible ability to better monetize its customer base,” Worthington wrote in a note to clients.
“Ultimately, we believe Robinhood has made notable progress in legitimizing its operations from its primary reliance on meme stock trading three years prior. In particular, new product development, including its credit card, solicitation of active traders, building its cryptocurrency platform, and developing derivatives trading (including the potential for event products/betting products) over time. he added.
Learn more: Here’s What Other Analysts Rate Robinhood Stock
According to Worthington, Robinhood has taken a series of steps to get more into the good graces of investors.
In October, Robinhood announced it would launch futures and index options trading, and introduced Robinhood Legend, billed as a sleeker platform aimed at more sophisticated traders.
In June last year, cryptocurrency exchange Bitstamp was acquired, while AI-powered investment research firm Pluto was acquired in July. It also took on credit players American Express (AXP) and Visa (V) in March, with the launch of a credit card offering 3% cashback.
Robinhood co-founder and CEO Vlad Tenev told Yahoo Finance in a December interview (video above) that his goal was to make Robinhood a one-stop shop for generational wealth creation.
Combine declining revenue with high interest rates, a rise in crypto, and a lighter spending base after several rounds of layoffs, and Robinhood wowed investors with its 2024 results.
Its third-quarter revenue increased 36% year-over-year to $637 million. Net income improved significantly to $150 million, compared with a loss of $85 million a year ago.
Average revenue per user increased 31% to $105. Gold subscribers reached 2.2 million. The total number of funded customers reached 24.3 million, 1 million more than last year.
For the nine months ended September 30, total revenue increased 39% to $1.9 billion. Net income fell from a loss of $571 million to a profit of $495 million.
