A major investment firm is betting big on the future of retail trading. On Tuesday, Cathie Wood’s ARK Invest purchased approximately $13 million worth of Robinhood (HOOD) shares. This move follows a massive announcement that the U.S. Treasury selected Robinhood to help run a new government-backed savings program known as “Trump Accounts.”
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Two ETFs to trade ARKK long or short: TARK & SARKThe news acted like a shot of adrenaline for the platform, causing the stock to jump over 7.9% in pre-market trading today.
Government Partnership Sparks Institutional Buying
The U.S. Treasury has designated Robinhood as the official brokerage and initial trustee for a new initiative aimed at the next generation. Under this program, every eligible U.S. citizen born between 2025 and 2028 will receive a $1,000 government contribution into a tax-advantaged investment account.
ARK Invest reacted quickly to this news. The firm added a total of 182,641 shares across three of its major funds, including the ARK Innovation ETF (ARKK). This represents the first time the firm has bought into the platform in nearly a month. While the stock has struggled recently, this government tie-up gave investors a reason to jump back in. Robinhood shares surged over 7.5% in after-hours trading, climbing toward $75.
Robinhood Takes a Lead Role in Youth Savings
The Trump Accounts program is designed to encourage early investing. While BNY (BK) will act as the financial agent to manage the accounts and develop the official app, Robinhood will handle the actual trading and trustee duties.
Robinhood is also showing its own commitment to the program. The company will match the government’s $1,000 gift for the children of its own employees. This deal makes Robinhood a key partner for the U.S. government. Even though the company’s crypto sales fell earlier this year, having millions of new government-backed accounts creates a strong base for future growth.
HOOD Share Buybacks Create a Safety Net
Beyond the government news, the company is taking steps to protect its own stock price. Last month, the board approved a $1.5 billion share buyback program that will take place over the next three years.
This buyback is a signal that management believes the stock is currently undervalued. Despite missing some revenue targets in the most recent quarter, the combination of the buyback and the Trump Accounts win has shifted the mood around the company. ARK Invest’s multi-million dollar purchase shows that professional investors are beginning to see a bottom for the stock as it settles into its new role as a government partner.
Is HOOD Stock a Buy?
Robinhood stock has a consensus Strong Buy rating among 17 Wall Street analysts. This rating is based on 15 Buy and two Hold recommendations issued in the last three months. The average HOOD price target of $114.40 implies 64.3% upside from current levels.
