Robinhood (HOOD) shares surged in pre-market exercise Thursday after the favored buying and selling app reported fourth-quarter earnings that beat Wall Road estimates pushed by an enormous leap in crypto income.
The corporate reported $358 million in crypto transaction income within the quarter, the very best contribution from digital-asset buying and selling up to now, Wall Road financial institution JPMorgan (JPM) mentioned in a analysis report Wednesday.
JPMorgan raised its worth goal for the inventory to $45 from $39, whereas sustaining its impartial ranking. Citi (C) raised its goal to $60 from $45 and stored its impartial ranking on the inventory. Dealer Bernstein greater than doubled it worth goal to $105 from $51 and stored an outperform ranking on the shares.
The inventory jumped 13% to $63.20 in early buying and selling Thursday following outcomes, launched after the market closed on Wednesdy.
Robinhood mentioned fourth-quarter income rose 115% from the earlier 12 months to $1.01 billion, beating Wall Road analysts’ estimate of $945.8 million, in keeping with FactSet information. Transaction-based earnings elevated 200% year-on-year, primarily as a result of a 700% rise in cryptocurrency income.
Crypto income usually contributes 10%-20% of whole income, JPMorgan famous. The 46% leap in whole cryptocurrency market cap within the interval and the rise in Robinhood notional volumes, which had been 393% increased quarter-on-quarter, fueled the income beat.
The corporate has large plans for its crypto enterprise. “Administration seeks so as to add extra tokens, strengthen its pockets providing, add an order e book with change routing performance, combine Bitstamp and discover tokenization longer-term,” the report mentioned.
Robinhood has benefitted from favorable traits because the begin of the 12 months, with “crypto market tailwinds and retail exercise remaining sturdy,” Citi mentioned.
If this constructive backdrop is maintained, the shares are more likely to see help, however traders ought to anticipate volatility. Whereas the financial institution has turn into extra constructive on the corporate’s basic outlook, it mentioned it most well-liked to attend for a “extra affordable entry level.”
Bernstein reiterated that Robinhood was the most effective thought within the dealer’s international digital property protection. It mentioned it anticipated continued momentum within the first quarter “pushed by crypto volatility and a sustained worth cycle.”
Learn extra: Robinhood’s Huge Earnings Beat May Bode Properly for Coinbase
