Robinhood stock price has surged this year as investors cheered the company’s entry into tokenized assets. HOOD jumped to a high of $100, up by 1,150% from its lowest level in 2023, making it one of the best-performing American stocks. So, can this bull run continue?
Why Robinhood stock is soaring
Robinhood share price has been in a strong bull run in the past few years as the company has gained market share in the stock trading industry. It has also continued to innovate, which has led to its growth.
It was the first brokerage company to offer 24-hour stock trading in the US. It also beat other companies in the booming crypto industry, where it has become a formidable competitor to Coinbase.
Robinhood has expanded to other countries, where it continues to gain market share. This week, the company announced its entry into tokenized stocks, offering over 200 American stocks to its European clients.
All these initiatives have helped the company continue its growth. Its annual revenue jumped from over $958 million in 2019 to over $2.9 billion last year, a figure that analysts anticipate will continue growing.
Yahoo Finance data show that analysts anticipate second-year revenue to come in at $897 million, a 31.6% increase from the same period last year.
It will then generate over $900 million in the third quarter, representing a 41% increase from the same quarter last year. This growth will partially be because of its recent acquisition of BitStamp, a leading player in the crypto industry.
Analysts expect the results to show that its annual revenue will be $3.6 billion this year, followed by $4.26 billion in the next financial year.
Robinhood has also become a highly profitable company in the past few years. It made a net loss of over $3.6 billion in 2021, then narrowed it to $1.02 billion in 2022, and $541 million 2023. Finally, the company made a net profit of $1.4 billion, a trend that will continue.
Wall Street analysts anticipate the results to show that its earnings per share (EPS) will reach $1.47 this year and $1.74 in 2026.
Is HOOD overvalued?
The ongoing Robinhood stock surge has raised concerns about its valuation. It has moved to $97, much higher than the average Wall Street estimate of $73.98. This rally has given it a market cap of over $86 billion.
The surge has brought its trailing twelve-month earnings per share to 52, and its forward multiple of 72. These multiples are higher than the industry averages of 13 an 11, respectively.
The expensive valuation is a sign that investors expect its business to continue growing in the future. However, there is a risk that it will start to moderate in the coming months.
HOOD stock price analysis
Robinhood stock chart | Source: TradingView
The weekly chart shows that the Robinhood stock price has been in a strong bull run n the past few months. It has jumped in the last nine consecutive weeks, its longest winning streak in years.
HOOD has moved above the crucial resistance level at $67, invalidating the double-top chart pattern. It has also moved significantly above the 50-week and 25-week exponential moving averages.
Therefore, there is a risk that the stock will go through mean reversion, where it drops and moves back to its historical averages. If this happens, it may drop to $67, possibly after it publishes its financial results.
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