Popular trading platform operator Robinhood (HOOD) was expected to join the S&P 500 Index ($SPX) after its quarterly reshuffle. In fact, there was much anticipation around this development, with Bank of America even naming Robinhood as a top candidate to join the index. 

Inclusion in the index usually boosts stock performance and increases liquidity. Robinhood also had something to look up to as its competitor, Coinbase Global (COIN), is already part of the coveted index. But when the final list dropped on June 6, Robinhood was nowhere to be found, triggering a 2% slide in the stock on June 9. While getting left out of the SPX certainly stings, does it mean investors should steer clear of Robinhood altogether? 

About Robinhood Stock

Founded in 2013, California-based Robinhood (HOOD) is a popular equity, options, and cryptocurrency trading platform that became popular by introducing commission-free stock trading. With a market cap of roughly $66.3 billion, Robinhood’s stock has been on an upward trajectory this year. 

The company acquired crypto exchange Bitstamp, marking a solid expansion. The deal introduced the company’s first institutional crypto business. Robinhood also signed a deal to acquire Canadian cryptocurrency company WonderFi Technologies. Therefore, it is evident that Robinhood is aggressively trying to grow its cryptocurrency trading business. This has led to the stock surging this year. 

Over the past 52 weeks, the stock has gained a staggering 214%. Just for comparison, the broader SPX has gained a modest 11.5% over the same period. So far this year, the stock has returned an impressive 99.8% and posted a 52-week high of $77.80 in early June. HOOD is only off 4.3% from this high. 

Robinhood’s stellar run this year has turned heads, but the surge comes with a steep price tag. The stock is presently trading at 59.3 times forward earnings, which is much higher than the sector median of 10.78x. 

Robinhood’s Q1 Results Surpassed Expectations

On April 30, Robinhood posted robust results for the first quarter of this year. Its total net revenues rose by 50% from the prior year’s period to $927 million. This was higher than the $915.7 million that Wall Street analysts were expecting. At the center of this growth was Robinhood’s platform. Cryptocurrency led the growth, as revenue from this section improved by 100% year-over-year to $252 million due to a higher rebate rate from crypto market makers, and a 45% increase in the number of users placing cryptocurrency trades. 

In addition, options revenue increased 56% to $240 million, while equity revenue jumped by 44% to $56 million. All of this culminated in Robinhood’s transaction revenues increasing by 77% year-over-year to $583 million. The company’s funded customers increased by 8% year-over-year during the quarter to 25.8 million. 

The overall growth on Robinhood’s platform led to an increase in its profitability. Its net income more than doubled, growing by 114% year-over-year to $336 million. Its EPS came in at $0.37, up 106% year-over-year and surpassing the Wall Street estimated EPS of $0.33. 

Additionally, Robinhood announced that it would raise the total amount of its existing share repurchase program from $1 billion to $1.5 billion, reflecting confidence in its growth prospects and financial robustness. Under the existing authorization, the company has repurchased 20 million shares of its Class A common stock through April 25 for a total of $667 million. 

Analysts are reasonably optimistic about Robinhood’s earnings growth trajectory, projecting EPS growth of 38.1% year over year to $0.29 in the second quarter. Looking ahead, for 2025, EPS is expected to increase by 12.8% to $1.23, followed by a 21.1% rise to $1.49 in 2026. 

What Do Analysts Expect for Robinhood Stock?

So far this year, Robinhood’s stock has been soaring, which has raised expectations on Wall Street. For instance, Deutsche Bank analyst Brian Bedell recently raised the price target on Robinhood from $70 to $85, while maintaining a “Buy” rating on the stock. This raise comes when the market environment has become favorable for Robinhood on the backs of its crypto market operations. 

Overall, Wall Street is still showing faith in HOOD, giving it a consensus rating of “Moderate Buy.” Based on the 21 analysts’ ratings on the stock, 12 have rated it a “Strong Buy,” two suggest a “Moderate Buy,” six analysts recommend a “Hold,” and only one maintains a “Strong Sell” rating. 

Although the stock is already trading at a premium to its average analyst price target of $64.11, the Street-high target of $105 suggests that HOOD can still rally as much as 44% from its current levels. 

Key Takeaways 

Not making the S&P 500 Index in this quarter is a hit on Robinhood’s stock trajectory. However, the company’s acquisitions show that Robinhood has all the tools to make it even bigger in the cryptocurrency trading space. While some analysts are tepid on the stock, Robinhood’s rapid customer growth might keep the stock surging in the near term.