Robinhood stock is breaking out. Can a cup have two handles?

Robinhood Markets

Robinhood Markets

HOOD

$0.43



1.68%



175%

IBD stock analysis

• The cup has two handles with buy points at 21.54 and 24.06.

Composite assessment

Industry group ranking

Emerging pattern

Cup with handle

* No real-time data. All data shown was collected on 10/8/2024 at 12:50 PM EDT.

Robinhood is the IBD Stock of the Day for Tuesday. Shares of the brokerage platform rallied to reach a buy point in early trading.

Robinhood (HOOD) jumped on Tuesday after Barclays raised its price target on HOOD stock on Monday. Barclays wrote in an earnings preview for brokers, asset managers and exchanges that we are moving further towards a “normal” market environment. According to the company, the IPO and merger market is showing “signs of life.” Meanwhile, the Federal Reserve’s interest rate expectations are providing “renewed optimism.”

However, Barclays noted that industry group activity in the third quarter itself was weaker than expected. The company raised its price target on Robinhood to 23 from 20 and maintained an equal-weight rating on the shares.

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Robinhood Momentum

Separately, Deutsche Bank said on September 30 that it remained “encouraged” by Robinhood’s revenue and profit momentum. The company has a number of initiatives to attract more customers to the platform, leverage addressable markets and increase user activity.

Deutsche Bank expects Robinhood to generate net new money at an annual rate of over 20% through 2025, slowing to 20% in 2026. This should help enable further adjusted EBITDA margin expansion and “strong” double-digit profit growth in 2025 and 2026. Deutsche Bank increased its price target on HOOD shares from 24 to 27 and maintained a buy rating on the stock.

Citi also raised its price target on HOOD stock to 23 from 19 on Sept. 27, citing strong net deposit trends and trading activity in recent periods. The company has a neutral rating on the stock. All broker information from Barclays, Deutsche Bank and Citi was reported by The Fly.

Crypto expansion, earnings preview

Elsewhere, Robinhood Crypto launched cryptocurrency transfers for customers in Europe on October 1. The launch allows customers to deposit and withdraw more than 20 cryptos including Bitcoin, Ethereum, Solana, USD Coin and others. Robinhood Crypto is also offering customers in Europe a limited offer for a 1% markup on all crypto deposits.

Other benefits include Bitcoin trading with no fees upon sign-up, the ability to stake Solana tokens with an APR of around 5.23%, and 15% rewards on USDC holdings.

Meanwhile, Robinhood and London-based fintech firm Revolut are exploring the possibility of launching stablecoins, Bloomberg reported in late September. Stablecoins are cryptocurrencies designed to maintain a specific price over a specific period of time and the value is tied to a reference value. Many stablecoins are designed to stay at $1.

Digital asset firm Tether’s USDT token currently accounts for more than two-thirds of the $170 billion stablecoin market.

Robinhood reported second-quarter cryptocurrency revenue of $81 million, compared to $126 million in the previous quarter. FactSet predicts that Robinhood will record crypto revenue of $68 million in the third quarter, falling to $66 million in the fourth quarter. Analysts expect this value to rebound in 2025 with quarterly crypto sales of $80 million or more. FactSet expects crypto sales to rise to $90 million or more per quarter in 2026.

For third-quarter results on Oct. 30, FactSet forecast Robinhood will report a profit of 18 cents per share, an improvement from a loss of 9 cents a year earlier. Analysts expect revenue to rise more than 39% to $651 million. Monthly active users are expected to increase to 12.05 million, up from 11.8 million in the second quarter and 10.3 million last year.

Robinhood posted triple-digit earnings growth over the past three quarters and saw an average revenue increase of 34.7% during that period.

Robinhood stock

HOOD stock gained 7.6%, breaking out Tuesday and jumping above a 24.06 cup with handle buy point. Investors could use the September 30 high of 24.13 as an alternative buy point.

The latest entry comes after Robinhood broke out of a seven-week cup-with-handle base on September 12. However, over the past three weeks, shares have remained at the top of this buy zone, creating a new grip and a new buying opportunity.

As of Monday’s close, Robinhood has seen its share price rise nearly 97% in 2024.

According to IBD Stock Checkup, HOOD stock is a member of the IBD Big Cap 20 list and tops the Finance-Investment Bank/Bankers Group.

Robinhood has a perfect 99 Composite Rating that combines various technical indicators into one easy-to-read score. The stock has received an EPS Rating of 81 based on its recent winning streak. Meanwhile, Robinhood’s Relative Strength Line is trending upward toward 52-week highs, giving it an RS Rating of 95.

For more stock news and updates, you can follow Harrison Miller on X/Twitter @IBD_Harrison

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