Robinhood Markets, Inc. (HOOD) is catching the eye of analysts, with Piper Sandler’s Patrick Moley maintaining an Overweight rating and raising the firm’s price target to $30, representing an 8% upside potential. This bullish outlook is fueled by the company’s recent foray into index options and futures trading, which Moley believes will unlock significant revenue growth.
Moley’s new price target reflects an estimated 8 times his 2026 revenue EPS estimate, an increase from the previous 7 times estimate. This adjustment acknowledges the substantial revenue opportunity presented by the new products. The analyst’s optimism is rooted in the belief that Robinhood’s competitive pricing will attract active retail traders who are currently using competitor platforms.
Last week, Robinhood hosted its first annual Robinhood Markets Summit 2024, where they unveiled a slew of new products. Notably, they introduced their new web-based trading platform, “Robinhood Legend,” and confirmed their upcoming launch of index options and futures trading, complete with detailed pricing information. For index options, Gold subscribers will enjoy a reduced rate of $0.35 per contract, while non-Gold subscribers will pay $0.50. Similarly, futures trading will cost Gold subscribers $0.50 per contract and non-Gold subscribers $0.75.
Moley’s optimistic outlook is further bolstered by his increased EPS estimates for 2025 and 2026, which he raised by 4 cents each to $0.71 and $0.91, respectively. This adjustment stems from the anticipated impact of the new products. Moley’s base case for 2025-26 assumes index options will contribute around 10% to Robinhood’s total options volume, with futures trading accounting for approximately 5% of the company’s total DARTs. Furthermore, he anticipates that Gold customers will comprise 75% of the volume in both index options and futures trading.
This expansion into uncharted territory could be a game-changer for Robinhood Markets, which has built a strong brand as the commission-free online brokerage for the masses. The company’s strategy to target sophisticated, active retail traders by offering lower prices on popular tools could disrupt the market and put pressure on established players in the index options and futures trading spaces.
While Robinhood’s offerings might not be as robust as its competitors, the combination of its new web platform, incentive match programs, and competitive pricing could be enough to secure market share among the coveted active retail trader demographic. As of Monday, HOOD stock is up 0.84% at $27.06.