Robinhood Markets , Inc. (NASDAQ:HOOD) is still at an early growth stage, and is likely to expand on its product offering. Additionally, international expansion remains in the cards. I am bullish on Robinhood at current levels.
The company's stock price action has been relatively mixed since its July 29 initial public offering.
After opening at $38 per share, HOOD surged to a high of $85 on Aug. 4. However, a sharp correction has followed, and the stock currently trades at below $50. (See HOOD stock charts on TipRanks)
Healthy Q2 Results
On August 18, Robinhood announced its results for Q2 2021.
Revenue soared by 131% year-over-year, however, Robinhood expects seasonal weakness in Q3 2021, and lower investing activity as a result.
Robinhood also reported healthy growth in cryptocurrency trading on its platform, with $233 million in revenue brought in, compared to $5 million in Q2 2020. This accounted for 52% of Robinhood's total transaction revenue.
Given the rapid adoption of cryptocurrencies (there are 221 million global crypto users as of June, compared to 100 million in January), Robinhood is well-positioned to benefit further.
It is notable, however, that 62% of the aforementioned crypto trading volume was in Dogecoin. This significant trading concentration is worthy of concern.
For Q2 2021, Robinhood reported 109% year-over-year growth in monthly active users to 21.3 million. It seems very likely that healthy growth in active users will sustain.
It also seems likely that Robinhood will pursue international expansion. As of June 2021, the company had a cash buffer of $5.1 billion. With an asset-light business model, the funds are likely to be utilized for aggressive expansion, and potential acquisitions.
Wall Street’s Take
According to TipRanks’ analyst consensus rating, HOOD stock comes in as a Moderate Buy, with six Buy, five Hold, and one Sell ratings assigned in the past three months.
The average Robinhood price target is $52.18 per share, implying 7.8% upside potential from current levels.
Concluding Views
It’s worth noting that Robinhood is still at an early growth stage.
With an exciting roadmap, Robinhood looks attractive. Some exposure to the stock can be considered at current levels.
Disclosure: On the date of publication, Faisal Humayun had no position in any of the companies discussed in this article.
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