Robinhood: Analyst sees a credible case for upside

Investing.com -- Truist initiated coverage of Robinhood Markets at Buy in a note on Wednesday, saying the trading platform’s product expansion and scale economics position it for sustained growth and margin expansion as it moves upmarket.

The bank set a $155 price target on the shares. Analyst David Smith said Robinhood’s “leading product velocity has driven sizable growth in key metrics and share gains as the company expands its addressable customer universe.”

He added that the company is increasingly able to attract “larger wallets,” supporting higher average revenue per user over time.

Truist believes Robinhood is on pace for a second consecutive year of more than 50% revenue growth and expects growth of approximately 20% or more to be achievable for several years, even from a higher base.

The firm highlighted that growth is becoming more balanced across business lines, though crypto, options and net interest income remain the largest contributors.

Product expansion is said to be a key driver of the bullish view. Truist noted a “constant rollout of new products and refinements” that help attract new users and deepen engagement among existing customers.

The firm pointed to prediction markets as “one of its fastest growing products ever,” alongside recent acquisitions that provide entry points into advisory and institutional markets.

On profitability, Truist believes Robinhood’s largely fixed cost base supports high incremental margins.

Truist acknowledged the stock screens as expensive on near-term metrics but feels the combination of growth and margin expansion “creates a credible case for upside to current valuation.”

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