Jim Cramer is a television personality many look up to. Known for his straightforward stock picks, Cramer has helped numerous investors make informed buy and sell decisions. This month, he identified one stock to buy- Robinhood (Nasdaq: HOOD).
The fintech company offers a trading platform for stocks, options, cryptocurrencies, exchange-traded funds, and futures contracts. Cramer calls the company the “rebellious brokerage.” While he mentions that the company will always be linked to GameStop Corp. (NYSE: GME), it has become much bigger than that and could be one of the greatest stocks of this era. Cramer also thinks that the new investors are much younger and tend to prefer working with Robinhood.
Solid fundamentals
Robinhood went public during the meme stock frenzy and attracted young, new investors. Its platform offers fee-free trades which means investors take home higher profits. In 2024, it had 25.2 million accounts and the assets under custody stood at $193 billion.
For the first quarter, the revenue came in at $927 million, up 50% year-over-year and the net income was up 114% year-over-year to $336 million. The average revenue per user jumped 39% year-over-year to $145. Its Gold subscribers also increased 90% by 1.5 million. Robinhood has benefited from the higher equity trading and reported an improvement in the monthly active users.
Robinhood’s push in the cryptocurrency market has worked in the stock’s favor. It recently announced the launch of a tokenized stock product and is also building the Robinhood Chain, an exclusive Layer 2 network. Robinhood is providing tokenized U.S. stocks for its European clients and expanding its market there.
This will open a new revenue stream for the company. It also plans to add new features like crypto reward cards to attract investors. These measures will work as a growth driver throughout 2025.
Impressive rally
Exchanging hands for $91, the stock is up 131% year-to-date and over 300% in 12 months. It has gone from $22 last July to $91 today and I believe it will hit the triple digits very soon. The company’s product diversification, expansion efforts, and a solid balance sheet will help achieve growth this year.
Rising interest rates impacted the business but it picked up again in 2024. The management introduced digital payments, Cash Card, and the Gold tier which retained users and attracted new investors. The company has recently attracted more attention by offering tokenized exposure to startups like OpenAI.
Wall Street is bullish on the stock
Instead of focusing on experienced investors, Robinhood has achieved success by targeting younger investors. Its app has a simple interface, and the company adds new products and services regularly, to retain the users. The brokerage offers a bunch of services and has attracted attention for its crypto offering recently. Robinhood has become much more than a meme stock and its growth could explode in the coming years.
Besides Cramer, several Wall Street analysts are bullish on the stock. Citi has a price target of $100 with a neutral rating while Mizuho has a price target of $99 with an Outperform rating. The stock isn’t cheap, it has a premium valuation but it has had an excellent run this year, and considering the new services, Robinhood could keep ruling the market.
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