Truist thinks that Robinhood has more room to rally. The bank initiated the brokerage platform at a buy rating and a $155 price target, which implies upside of 30% ahead. Analyst David Smith said that this “current optically lofty valuation” was justified by Robhinhood’s potential growth and profitability. Smith believes Robinhood is on track for its second straight year of revenue growth of more than 50%. Going forward, he thinks that 20% expansion is an achievable number for the next few years. HOOD YTD mountain HOOD YTD chart Smith wrote that this growth has been fueled by an increasingly balanced revenue mix, aided by the constant rollout of new products and refinements of existing ones. These increased product offerings have also helped the platform attract new and larger customers and increase average revenue per user. Smith noted that prediction markets are currently one of Robinhood’s fastest growing products ever. “HOOD’s leading product velocity has driven sizable growth in key metrics & share gains as the company expands its addressable customer universe, allowing it to keep moving upmarket towards larger wallets,” he said. “These continued prospects for growth, combined with attractive scale economics, should allow for ongoing margin expansion, despite leading pricing.” Profitability-wise, Robinhood’s margins have shown consistent improvement since the company has become profitable in 2022. Both continued margin expansion and potential growth create a credible case for upside to current valuation, Smith added. “The company is one of the top performers in the S & P in terms of both growth and margins,” he said. “With Robinhood’s broader financial offerings beyond trading such as banking and advisory still in very early stages, and the company only just scratching the surface on international and institutional customers, we see a long runway of outsize growth for HOOD.” Shares of Robinhood have surged 220% this year. The stock gained another 1% in the premarket.
