Robinhood Markets (NASDAQ:HOOD) stock rose 7% overnight after it launched a credit card.
The online brokerage’s Robinhood Gold Card offers 3% cash back on purchases. While it has no annual fee, it requires a Robinhood Gold membership at $5/month or $50/year.
HOOD stock was due to open this morning at $20.80 per share, a market capitalization of about $18 billion on 2023 revenue of $1.85 billion. The stock is up 51% in 2024.
Robinhood Merry Again?
The Gold Card was introduced as part of a keynote event meant to reboot the company. At the event, executives said they were “bridging the gap” between smaller investors and elite banking services.
Robinhood became famous as the home of “meme traders” in early 2021, with small investors buying shares in companies pushed at Reddit (NASDAQ:RDDT) like AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME).
Robinhood came public in July 2021 at $38 per share. It was hit hard by the end of that year’s bull market. Shares fell from a high of $55 in August to below $10 in early 2023. While it’s still down 45% from its IPO price, it’s up 122% over the last year.
Now that the meme traders are back, so is Robinhood’s swagger. Some of the new cards will contain actual gold in them. They will go to members who refer at least 10 other people to its subscription plan.
While trading on Robinhood is free, the Gold Plan is the company’s cash cow. It offers research, margin investing, and 5% interest on uninvested cash.
The company recently ramped up its services to crypto investors, creating an Android version of its crypto wallet. It’s available at Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Play store. An Apple (NASDAQ:AAPL) version of the wallet debuted a year ago.
HOOD Stock: What Happens Next?
Robinhood’s return to prominence is another indication that “animal spirits” and a fear of missing out (FOMO) have returned to the market.
As of this writing, Dana Blankenhorn had LONG positions in AAPL and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
