Earlier this week at its investor day, Robinhood (HOOD) revealed a bold strategy to strengthen its position as the crypto platform for active retail traders. Over the next decade, the company intends to grow its crypto exchange business and become the top active trading platform within the next two years.
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Surprisingly, this strategy includes embracing an older yet essential technology: the desktop computer.
HOOD Is Focusing on Active Retail Traders
Robinhood revealed at its Investor Day that nearly 50% of retail trading on its platform still occurs on non-mobile devices. However, desktop-based trading, or “web” trading, has historically accounted for less than 10% of Robinhood’s trading volume.
To address this gap, Robinhood introduced “Legend” earlier this year, a desktop platform designed for serious traders. As CEO Vlad Tenev explained, active traders are vital to Robinhood’s revenue growth. These traders are more likely to subscribe to Robinhood Gold, borrow for margin trading, and trade frequently, generating revenue through payment for order flow. Robinhood Gold is the company’s premium subscription service, offering users access to instant deposits, interest on uninvested cash, and margin benefits.
Additionally, the company is expanding its offerings to meet the needs of sophisticated traders, including futures trading, index options, event contracts, and 24-hour trading.
Goldman Sachs Analyst Upgrades HOOD to a “Buy”
After Robinhood’s investor day, Goldman Sachs analyst James Yaro upgraded the stock from Hold to Buy and raised his price target from $40 to $46. Yaro highlighted Robinhood’s expanding total addressable market, its potential for international growth, and its prospects in the wealth management sector as key drivers for the upward revision.
The analyst’s new price target implies an upside potential of 18.2% from current levels.
Is HOOD a Good Stock to Buy?
Analysts remain cautiously optimistic about HOOD stock, with a Moderate Buy consensus rating based on 11 Buys, five Holds, and one Sell. Over the past year, HOOD has skyrocketed by more than 200%, and the average HOOD price target of $38.67 implies a downside potential of 0.6% from current levels.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
