What Happened?
Shares of financial services company Robinhood (NASDAQ: HOOD) jumped 15.3% in the pre-market session after the company reported strong fourth quarter 2024 results, which blew past analysts' revenue, EPS, and EBITDA expectations.
Specifically, cryptocurrency trading revenues soared by 700%+ year-on-year while equities and options increased by 144% and 83%, respectively - note that crypto and options trading are more profitable business lines than equities due to the wider spreads. Margins expanded significantly, with net income jumping over tenfold to $916 million, while earnings per share more than tripled from the previous year, benefiting from higher trading volumes.
Looking ahead, management sees continued momentum, with a focus on expanding its crypto offerings and international reach, particularly in the Asia-Pacific region. Zooming out, we think this was a good quarter with some key areas of upside.
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What The Market Is Telling Us
Robinhood’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. But moves this big are rare even for Robinhood and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 27 days ago when the stock gained 6.7% on the news that Morgan Stanley named the stock a "Top Pick." The firm added, "We see a compelling opportunity... and move to Top Pick."
Robinhood is up 58.3% since the beginning of the year, and at $62.44 per share, has set a new 52-week high. Investors who bought $1,000 worth of Robinhood’s shares at the IPO in July 2021 would now be looking at an investment worth $1,793.
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