According to Bernstein analysts, while Robinhood’s (NASDAQ:) rise in 2021 was tied to its zero interest rate policy (ZIRP), the platform is now benefiting from a “peak interest rate policy” (PIRP) as rates begin to decline.
“HOOD not only survived the winter, but is now evolving into a sustainable company with improving economics,” the company said in a note Thursday.
Robinhood stock is up nearly 30% in the past month and nearly 100% year to date. Bernstein highlights five key The reasons behind the recent Robinhood hack.
Growing assets, not just trading revenue: Robinhood’s assets under custody grew to $140 billion, up 57% year-over-year by the second quarter of 2024. “Assets per customer doubled from $2,800 to $5,800 per account,” Bernstein noted.
They add that the company has succeeded in attracting new deposits and stimulating transfers with offers such as a 1% incentive for transfers and competitive returns on uninvested assets.
Transaction revenue: Trading volumes have rebounded via Robinhood, Bernstein says key products. Stock trading rose 57% year over year, while cryptocurrency trading jumped 135%. “Transaction revenue is back to approximately 50% of total revenue after bottoming out at 40% in Q2 2023,” the company highlights.
Crypto momentum: Robinhood’s cryptocurrency revenue rose 160% in the first half of 2024. According to Bernstein, Robinhood is poised to further capitalize on the next crypto bull cycle, fueled by the recent acquisition of Bitstamp, which adds new revenue streams in stablecoins, staking, and transfers Finance. Derivatives.
Product innovation and expansion: Robinhood’s global expansion and product innovation are as well It is said to be pay. The company has launched new services such as Robinhood Wallet, enhanced offerings for Gold customers, and a retirement account program. Robinhood continues to ship new products and is expanding aggressively globally, Bernstein said, noting what has happened recently Subtraction operations in United Kingdom and Europe.
Strong operating leverage: Robinhood has significantly improved its cost structure, reducing operating expenses (excluding SBC) from 160% of revenue in Q1 2022 to 60% in Q2 2024. With revenue rising and 90% of costs fixed, Robinhood is seeing an experience strong Operating leverage. Bernstein expects “positive operating income for 2024 to be approximately $900 million.”
Bernstein maintains an Outperform rating on Robinhood, with a $30 price target.
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