Wall Street expects Robinhood's (HOOD.O), opens new tab revenue to hit record highs in the second quarter as retail investors flock to its commission-free app to trade so-called 'meme stocks' and cryptocurrencies.
The return of influencer Keith Gill, known online as "Roaring Kitty", rekindled investor appetite for retail favorites like GameStop (GME.N), opens new tab, luring mom-and-pop investors back to Robinhood. Its equity trading volumes surged 82% in April and 76% in May compared with a year ago.
"I expect the company to show growth leveraged to and correlated with stock and crypto markets," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
The company's popularity is immortalized in the retail trading saga of 2021, when it became the platform of choice for people to pump money into meme stocks during the pandemic-era lockdowns. The 11-year-old trading app has been chasing growth and looking to mature into a full-fledged financial services provider.
"The fundamental story has been improving in recent periods with healthy growth in deposits, margin balances, options/equities trading," Citigroup analysts said.
Meanwhile, sentiment in the crypto markets has also got a boost from signs of easing regulatory constraints after the approval of the first spot bitcoin exchange-traded funds by the U.S. Securities and Exchange Commission. Shrugging-off regulatory roadblocks and heavy volatility in the sector, the company is betting on crypto to be its next big avenue for growth.
