Robinhood (HOOD) shares rise as three major institutions raise price targets

Core Points

Goldman Sachs and Jefferies raised their target prices, and Robinhood Chain showed strong momentum

Main points

Mizuho Securities raised its target price for HOOD from US$130 to US$140, maintaining its "outperform" rating. Analysts expect a wave of initial public offerings (IPOs) from artificial intelligence (AI) companies to drive significant trading activity.

After SpaceX's public offering, the platform's stock trading volume increased by 24% month-on-month, and the number of options contracts surged by 38%.

Stock price dynamics and Mizuho Securities raised target price

Robin Hood Markets Inc.(HOOD) shares rose more than 2% in pre-market trading on Wednesday, reversing Tuesday's 3.91% decline. The stock's price is currently hovering around $117.34, with a year-to-date increase of about 3.75%.

This upward trend follows Mizuho Securities analyst Dan Dolev's revision of the HOOD target price. He raised his target price from $130 to $140 (a 7.7% adjustment) while maintaining his stance of "outperforming the market." This revised target price means that there is approximately 16% appreciation potential from current price levels.

Dolev pointed out that the expected wave of AI-related IPOs is a key catalyst for accelerating trading activity on the Robin Hood platform. He expected a scenario similar to the one seen when SpaceX went public, when the incident boosted stock trading volume by 24% month-on-month and prompted a 38% increase in options activity.

SpaceX's public offering also helped Robin Hood gain approximately 1 million funded accounts in the second quarter, the strongest quarterly customer acquisition data in nearly six months, Chief Financial Officer Shiv Verma confirmed.

Dolev predicts that these models may reappear as artificial intelligence companies enter the public market starting in October 2027. He said that if market conditions return to the post-SpaceX atmosphere, the upcoming IPO could "significantly boost HOOD's trading volume."

From a valuation perspective, Mizuho Securities gives HOOD a multiple of approximately 19 times expected revenue for 2027, compared with the current level of approximately 15 times. Dolev believes the premium is reasonable given Robin Hood's expansion trajectory and diversification into new products and international markets. He described this as "having new products and new geographical areas, with a total potential market (TAM) of US$600 billion."

Goldman Sachs and Jefferies further raise their target price

Goldman Sachs 'James Yaro raised his target price from $124 to $142, maintaining the "buy" recommendation. This target price means about 21% upside potential. Yaro highlighted the impressive early performance of Rothera, a predictive market product launched by Robin Hood in partnership with Susquehanna International Group.

Rothera generated approximately $150 million in annualized revenue in its first operating quarter. Yaro expects the business to continue to expand, thanks to Robin Hood's large retail user base and what he describes as "deep liquidity potential," coupled with a more competitive rate structure than rival prediction market platforms.

Jefferies 'Daniel Fannon also raised his price target to $140 from $127, maintaining his "Buy" rating after discussions with Chief Financial Officer Shiv Verma. Fannon highlighted strong fundamental trends, healthy net deposit activity and continued expansion of Gold membership subscriptions.

Robinhood Chain shows strong momentum

Fannon also focused on Robinhood Chain, pointing out that its daily trading fee reached US$8.2 million on September 4, while daily trading volume hit US$3.8 billion. Bernstein SocGen Group independently maintained its "outperform" rating, observing that the blockchain network has ranked among the top five in terms of transaction fees and transaction volume.

Since early August, HOOD has outperformed the S & P 500 by 33%. Mizuho Securities attributed the rebound mainly to the market's enthusiasm for predicting market opportunities.

Analyst consensus shows a "strong buy", reflecting 16 buy recommendations and 2 hold recommendations in the past three months, with an average target price of $131.73.