Why Longtime Robinhood Bear Is Throwing In The Towel After Surge 260%

With Robinhood (HOOD) stock up a whopping 260% over the past year, long-time Wall Street speculators are finally starting to give up.

JPMorgan analyst Ken Worthington raised his rating on Robinhood shares to Neutral from Underweight on Tuesday. Worthington has had an underweight rating on the stock — equivalent to a sell — since the trading platform company’s initial public offering (IPO) in July 2021.

Robinhood shares fell nearly 1% in premarket trading.

“Our upgrade comes against a backdrop of a constructive investment environment, a higher interest rate environment for a longer period, and a more credible ability to better monetize its client base,” Worthington wrote in a note to clients.

“Ultimately, we believe Robinhood has made significant progress in legitimizing its operations versus its primary reliance on stock trading three years ago. In particular, developing new products including its credit card, attracting active traders, and building its cryptocurrency platform. “And build derivative trading (including the potential for event-based betting products/products) over time,” he added.

Read more: Here’s what other analysts rate Robinhood stock

According to Worthington, Robinhood has taken a series of steps to get into the good graces of investors more broadly.

In October, Robinhood said it would launch futures and index options trading, and introduced Robinhood Legend, which was described as a sleeker platform aimed at more sophisticated traders.

June last year saw the acquisition of cryptocurrency exchange Bitstamp, while it acquired AI-powered investment research firm Pluto in July. It also targeted credit companies American Express (AXP) and Visa (V) in March, with the launch of a credit card offering 3% cash back.

Robinhood co-founder and CEO Vlad Tenev told Yahoo Finance in a December interview (video above) that his goal is to make Robinhood a one-stop-shop for building generational wealth.

Combine declining product, rising interest rates, rising cryptocurrencies, and a leaner expense base after several rounds of layoffs, and Robinhood has wowed investors with its 2024 results.

Third-quarter revenue grew 36% year over year to $637 million. Net earnings improved sharply to $150 million from a loss of $85 million a year ago.

Average revenue per user increased 31% to $105. The number of gold subscribers reaches 2.2 million. Total funded customers reached 24.3 million, one million more than last year.

For the nine months ended September 30, total revenue rose 39% to $1.9 billion. Net income went from a loss of $571 million to a profit of $495 million.

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