With Robinhood’s (HOOD) stock up a sizzling 260% over the past year, a long-time Wall Street bear is finally tossing in the towel.
JP Morgan analyst Ken Worthington upgraded his rating on Robinhood shares to Neutral from Underweight on Tuesday. Worthington had held an Underweight rating on the stock — the equivalent of a sell — since the trading platform company’s much-hyped initial public offering (IPO) in July 2021.
Shares of Robinhood slipped almost 1% in pre-market trading.
“Our upgrade comes on a still constructive investment environment, a higher-for-longer interest rate environment and a more credible ability to better monetize its customer base,” Worthington wrote in a note to clients.
“Ultimately, we think Robinhood has made notable progress in legitimizing its operations vs. its primary reliance on meme-stock trading three years prior. In particular, new product development including its credit card, solicitation of active traders, the buildout of its cryptocurrency platform, and the buildout of the derivative trading (including the potential for event-driven products/betting products) over time,” he added.
Read more: Here’s what other analysts are rating Robinhood’s stock
To Worthington’s point, it has taken Robinhood 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, billed as a sleeker platform that targets more sophisticated traders.
June of last year brought the acquisition of crypto exchange Bitstamp, while it scooped up AI-powered investment research firm Pluto in July. It also took aim at credit players American Express (AXP) and Visa (V) in March, with the launch of a credit card that offers 3% cashback.
Robinhood co-founder and CEO Vlad Tenev told Yahoo Finance in a December interview (video above) says his goal is to make Robinhood a one-stop shop for building generational wealth.
Combine the product drops with high interest rates, a crypto surge, and a leaner expense base after several rounds of layoffs, and Robinhood wowed investors with its 2024 results.
Its third quarter revenue grew 36% year over year to $637 million. Net earnings improved sharply to $150 million from an $85 million loss a year ago.
Average revenue per user increased by 31% to $105. Gold subscribers hit 2.2 million. Total funded customers reached 24.3 million, up 1 million from last year.
For the nine months ended Sept. 30, total revenue has increased 39% to $1.9 billion. Net income has swung from a loss of $571 million to a profit of $495 million.