Shares of Robinhood Markets Inc. (HOOD) surged 5% in pre-market trading on Friday, driven by increased optimism surrounding the stock trading app's growth prospects and potential foray into sports betting.
Mizuho Securities raised its price target on Robinhood, citing strong user interest in potential sports betting offerings on the platform. According to a survey conducted by Mizuho, two-thirds of Robinhood users already use mobile sports betting services, and a vast majority expressed interest in placing bets through the app if the service became available.
Analysts also cited improved payment for order flow data and robust crypto trading activity as factors contributing to upbeat revenue estimates for Robinhood. The company is expected to report a substantial jump in revenue and earnings for the fourth quarter, reflecting its rapid growth and diversification into new areas.
Beyond sports betting, Robinhood has been expanding into other financial services, including robo-advisory and wealth management. The company recently announced plans to acquire TradePMR, a custodial and portfolio management platform for Registered Investment Advisors (RIAs), further broadening its offerings.
The finalization of Robinhood's settlement with the SEC in January also removed a potential overhang on the stock, adding to the positive sentiment surrounding the company. With multiple catalysts driving its growth, Robinhood's stock has been on a tear, more than doubling from its September cup-with-handle breakout.
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