We recently published a list of 11 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where Robinhood Markets Inc. (NASDAQ:HOOD) stands against other stocks that will go to the moon according to Reddit.

Saira Malik, Nuveen’s Head of Equities and Fixed Income, recently joined CNBC’s ‘Closing Bell’ on February 18 to discuss opportunities outside the tech sector and her outlook for the markets. She began by addressing the two primary factors driving markets this year: technology and tariffs. Malik highlighted that while tech stocks have dominated the narrative, recent developments, such as DeepSeek’s announcement, have raised concerns about the immense spending in AI and the uncertainty surrounding its monetization and returns. Malik emphasized looking beyond tech to areas like infrastructure. She mentioned utility companies as a promising investment. When asked about momentum stocks, Malik explained that the momentum trade has propelled markets over the past few years, with the S&P 500 delivering over 20% annual gains during that period. However, this growth was largely concentrated in the MAG7, which resulted in an S&P 500 valuation premium of 20% above historical averages entering this year. She noted that the momentum trade is now unwinding, partly due to inflated expectations around AI and the lack of productivity gains despite tens of billions of dollars spent in the space.

Malik pointed out that international markets are outperforming US markets this year. European markets, in particular, entered 2025 with a 40% valuation discount compared to US markets and have a more cyclical bias. She stated that year-to-date returns suggest investors would benefit from owning international equities. While she expects the S&P 500 to post about 7% earnings growth for 2025 (following a strong Q4 with 12% year-over-year earnings growth), she believes international markets may continue to outperform due to their discounted valuations and cyclical exposure. Malik concluded by emphasizing the importance of being selective in this market environment. She recommended focusing on smaller mid-cap companies with profits, lower leverage, reduced refinancing risks, or economic sensitivity. Sectors like financials could thrive if deregulation or increased mergers and acquisitions activity materialize. She advised investing in stocks with upward earnings estimate revisions rather than those facing downward adjustments to capitalize on current market conditions.

Methodology

We first sifted through threads and posts on WSB and similar subreddits to compile a list of the top trending stocks among retail investors. We then selected the 11 stocks that analysts were bullish on and had an average upside potential over 40% as of March 3. We also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A successful business person confidently managing their finances on a mobile device.

Robinhood Markets Inc. (NASDAQ:HOOD)

Upside Potential as of March 3: 47.70%

Number of Hedge Fund Holders: 79

Robinhood Markets Inc. (NASDAQ:HOOD) provides a user-friendly financial services platform and enables access to stocks, ETFs, options, and cryptocurrencies, alongside various educational resources and financial products. It offers fractional trading, retirement accounts, and educational tools like Snacks and Learn, in order to democratize investing for a broad audience.

In Q4 2024, the company’s revenue exceeded $1 billion, and the full-year revenue was over $3 billion. This was a 58% increase as compared to 2023. The growth was majorly driven by new products like the Robinhood Gold Card, Robinhood Legend, and a derivatives business. All of these are directly related to the company’s active trader platform.

The recently launched Robinhood Legend is already generating $50 million in annualized trading revenue. Customers are putting more money into their accounts than ever before, with deposits reaching a record $50 billion, which is almost 50% more than before. The number of people paying for their premium Gold service is also up 80%. While about 10% of all Robinhood Markets Inc. (NASDAQ:HOOD) customers use Gold, over 30% of new customers in Q4 2024 signed up for it.

Baron FinTech Fund is bullish on Robinhood Markets Inc. (NASDAQ:HOOD) due to its transformation into a profitable, growth-oriented brokerage with strong customer retention and financial metrics. The fund stated the following in its Q4 2024 investor letter:

“We also initiated a position in Robinhood Markets, Inc. (NASDAQ:HOOD) during the quarter. Robinhood is an online brokerage that offers free trading across stocks, options, and cryptocurrencies. Baron Capital has long invested in successful brokerage companies such as Charles Schwab, Interactive Brokers, and LPL Financial. We first met Robinhood in 2021 during their IPO process. Customers were using Robinhood because of its low-cost offering and simple user interface that makes trading easy and accessible. While we were impressed with management’s success in building a modern brokerage with a large user base and strong product-market fit, we were hesitant to invest at a cyclical peak in trading activity and fintech valuations during the middle of the COVID-era meme-stock craze. Following the IPO, trading activity soon normalized and the share price fell significantly.

After revisiting the company this past year, we believe Robinhood is a much-improved business today. Departing from its early reputation as a gamified enabler of retail speculation in meme stocks, Robinhood has been professionalized and transformed into a more durable company that can reliably gain market share and grow earnings over the long term. Some examples of the company’s maturation include: 1) providing retirement accounts that should create larger and longer-lasting client relationships; 2) launching the Gold subscription service that delivers additional value to Robinhood’s best customers; 3) introducing the web-based Legend platform that offers more advanced features for active traders; and 4) exercising expense discipline to right-size the cost base and deliver profitability alongside growth. These efforts have delivered strong financial results, with Robinhood generating annualized net new asset growth of 29%, custodied asset growth of 76%, and an adjusted EBITDA margin of 42% in the most recent quarter. Average revenue per user has also increased significantly from $60 in 2022 to $107 in the first nine months of 2024 across more than 24 million funded accounts. The customer retention rate is a very strong 95%, up from 80% three years ago…” (Click here to read the full text)

Overall, HOOD ranks 4th on our list of stocks that will go to the moon according to Reddit. While we acknowledge the growth potential of HOOD, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HOOD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.