Robinhood Markets (NASDAQ:HOOD) stock gained about 11% in yesterday’s extended trading session after posting a surprise profit in the fourth quarter of 2023. The company’s profit was supported by strong trading volumes, higher interest income, and lower operating expenses.
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HOOD is a commission-free trading platform known for its user-friendly interface and accessibility to retail investors.
Q4 Earnings Snapshot
The company posted Q4 earnings of $0.03 per share against a loss of $0.19 in the year-ago quarter. Analysts had expected HOOD to post a loss of $0.01 per share. At the same time, Robinhood’s revenues jumped 24% year-over-year to $471 million and were above the analysts’ expectations of $454.73 million.
The upside can be attributed to a 41% year-over-year increase in net interest revenue to $234 million. Also, transaction revenue rose 8% to $200 million due to higher cryptocurrency revenue and equity revenue.
Additionally, AUC (assets under custody) increased 65% year-over-year to $102.6 billion, owing to a rise in net deposits and higher equity valuations. Further, Robinhood witnessed a notable 25% year-over-year increase in its Gold premium plan subscribers to 1.42 million. Meanwhile, Q4 MAUs (monthly active users) totaled 11.4 million, declining by 800,000 sequentially.
2024 Outlook
The company expects to witness strong revenue growth in 2024. This is based on the company’s expectations of an over 20% surge in net deposits, higher Gold subscriptions, double-digit gains in trading market share, and new product introductions. Moreover, the company expects combined adjusted operating expenses and share-based compensation to come in the range of $1.85 billion to $1.95 billion.
Is HOOD a Good Stock to Buy?
On TipRanks, Robinhood stock has a Hold consensus rating. This is based on three Buys, six Holds, and two Sell ratings. Also, the average Hood stock price forecast of $12.65 implies a 6.8% upside potential from current levels. Over the past three months, shares of the company have gained 39.3%.
