Up 77% YTD, This Cathie Wood Stock Could Have More Upside Potential

Robinhood Markets (HOOD) is a financial services platform operating in the U.S. and U.K., best known for its discount trading app. Users can invest in stocks, crypto, exchange-traded funds (ETFs), American depository receipts (ADRs), and options. Since its initial launch, Robinhood has bulked up its offerings with its Gold subscription, retirement plans, a credit card, and more. Established in 2013, Robinhood is headquartered in Menlo Park, California, and carries a market cap of $20.1 billion. 

The company, which famously upended the brokerage business model, has been a longtime favorite of Ark Invest founder Cathie Wood, and she holds a stake worth about $292 million in her flagship Ark Innovation ETF (ARKK). HOOD is the No. 7 holding in ARKK currently, at about 4.7% of the fund's weight.

Given its heavy exposure to cryptocurrencies, HOOD stock has been on a bull run alongside Bitcoin (BTCUSD) this year. The shares are up 77% YTD, and HOOD has more than doubled over the past 52 weeks.

HOOD Reports Strong Q1 Earnings

The discount brokerage published its Q1 results on May 8, which featured record revenue of $618 million, up 40% YoY to beat the estimate of $555 million. Robinhood’s cryptocurrency segment led this strong revenue surge, as it posted a record 232% increase. Equities and options recorded revenue gains of 44% and 16%, respectively.

Net income for the quarter totaled $157 million, or $0.18 per share, compared to a loss of $511 million, or $0.57 per share, a year ago. The figure easily topped analysts' estimates for a profit of $0.05. The company was able to trim its operating expenses by 52% during the quarter, while also generating a 35% increase in its average revenue per user (ARPU).

Robinhood is set to announce its Q2 results on Aug. 7. Ahead of that report, CEO Vlad Tenev said of the current quarter, “Q2 is off to a strong start with April being our highest month of the year for Net Deposits and Gold Subscriber growth, and we’re excited to see strong interest from over 1 million customers in our Robinhood Gold Card.”

Are Analysts Warming Up to HOOD Stock?

Analysts have a consensus “Hold” rating for HOOD stock, despite the recent outperformance. Plus, the mean price target of $20.47 is a discount of roughly 10% to Friday's close.

However, HOOD recently snagged an upgrade to “Outperform” at Wolfe Research, with analyst Steven Chubak encouraged by a meeting with Chief Financial Officer Jason Warnick.

"We see a durable +30% GAAP EPS growth algorithm supported by 20%+ net deposit growth, 5%+ account growth, significant operating leverage (90% fixed expense base, 75% incremental margins), and strong FCF [free cash flow] generation," wrote Chubak in a note to clients, explaining that his view isn't influenced by Robinhood's exposure to the cryptocurrency market or potential meme stock buying.

The analyst added that he sees HOOD on track to earn $1 per share on a GAAP basis in 2026, with a price target of $29 - nearly 28% higher than Friday's close.

With 17 analysts in coverage, HOOD now has six “Strong Buy” ratings, up from four “Strong Buys” three months ago.