Shares of Robinhood (NASDAQ:HOOD) stock were on the move Monday, spiking some 12% higher to almost $93 per share.
Few stocks have performed better than Robinhood in recent times, as the stock is now up a ridiculous 144% year-to-date and 301% over the past 12 months.
Monday’s surge was due to a direct catalyst that should boost its business on a global scale. At a presentation in Cannes, France, Robinhood executives announced the launch of US stock and ETF tokens in the European Union (EU).
Stock and ETF tokens are derivatives tracked on the blockchain that follow traditional stocks and ETF prices. Essentially, they provide crypto investors in the EU with access to US stocks.
“Crypto was built by engineers for engineers, and has not been accessible to most people,” Johann Kerbrat, GM and SVP of Robinhood Crypto, said. “We’re onboarding the world to crypto by making it as easy to use as possible—with the goal of bringing powerful tools into one intuitive platform.”
With tokenized stocks, the Robinhood app in Europe goes from being a crypto-only to “an all-in-one investment app powered by crypto.”
European customers will now have access to more than 200 US stock and ETF tokens, including NVIDIA, Microsoft, Apple, NVIDIA, Microsoft, Apple, and the Vanguard S&P 500 ETF, among others. Further, stock token holders will get their dividend payments directly through the app.
Initially, stock tokens will be issued on Arbitrum, but down the road, they will be facilitated Robinhood’s Layer 2 blockchain, which is in development. The blockchain will be optimized for tokenized, real-world assets and support 24/7 trading, among other features.
Also, by the end of the summer, Robinhood is also rolling out crypto perpetual futures in the EU. This will provide customers with access to a new class of derivatives with continuous exposure and up to 3x leverage.
In addition, Robinhood is introducing crypto staking in the U.S., starting with Ethereum and Solana. Crypto staking is also available to Robinhood customers in the EU.
The online brokerage also announced the fall launch of the Robinhood Gold Credit Card, with cash back on purchases. It also plans to debut Cortex, an AI-powered investing assistant, later this year.
Further, Robinhood is offering US and EU investors the opportunity to earn a 1% deposit boost for transferring crypto deposit into Robinhood — with the chance to double it if total deposits hit the $500 million goal.
Robinhood stock got two massive upgrades this week, coinciding with the news. BofA Securities boosted its target by $30 to $95 per share while Compass Point raised its price target by $32 to $96 per share. This is only 3% to 4% over its current price, but remember, the stock has already gained more than 140% YTD and 301% over the past year.
The stock’s P/E ratio shot up to 45 and its forward P/E is even higher at 55, which suggests more exuberance than earnings.
Robinhood is a great company and tapping into the right avenues for expansion but just be cautious of that high valuation. Markets have been riding high over the past two months and the stock has tripled from $34 per share on April 8 to $93 per share just less than three months later.
The stock will surge when markets are hot, but it will likely drop when markets are not. Investors should be cautious of high value stocks right now, given the recent runup.
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