Why Are Robinhood (HOOD) Shares Soaring Today

What Happened:

Shares of financial services company Robinhood (NASDAQ:HOOD) jumped 13.3% in the morning session after the company provided its February operating data reflecting strong asset growth and higher trading volumes. Although its funded customers were only up by 130k compared to the previous month (23.6 million total), its Assets Under Custody (AUC) rose to $118.7 billion, representing a 16% month-on-month increase. This was driven by growing momentum in the public markets, which led to higher stock and cryptocurrency prices, and new inflows from existing customers into Robinhood's retirement products, which are offering customers a 3% match on any contributions. 

As a result, it wasn't surprising that volumes were up across all asset classes compared to the previous month. Notably, equity trading volumes were $80.9 billion (up 36% m/m) while crypto trading volumes were $6.5 billion (up 10% m/m). Given the increased platform activities, Securities Lending Revenue also benefitted and came in at $13 million, up 8%. Overall, the data showed Robinhood is performing well in the near term.

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What is the market telling us:

Robinhood's shares are quite volatile and over the last year have had 15 moves greater than 5%. But moves this big are very rare even for Robinhood and that is indicating to us that this news had a significant impact on the market's perception of the business.

Robinhood is up 46.6% since the beginning of the year. Investors who bought $1,000 worth of Robinhood's shares at the IPO in July 2021 would now be looking at an investment worth $520.68.

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