Robinhood Launches New Cash Card to Encourage Gen Z Start Investing

Robinhood Markets (NASDAQ: HOOD) announced that it has rolled out a new cash card to encourage the young generation to start investing. Also, the move comes as a response to the falling preference for credit cards.

Robinhood is an American financial services company known for pioneering commission-free trades of stocks, exchange-traded funds and cryptocurrencies via a mobile app.

HOOD rose 2.5% in Tuesday’s extended trading session.

The cash cards will be offered by Robinhood Money, LLC and replace the existing Cash Management product.

With this new card, people will be able to invest in their choice of assets, including cryptos and stocks. Robinhood has introduced the system to round up a cardholder’s expense to the nearest dollar and use the extra cents to invest in their preferred asset.

Apart from this, Robinhood is also offering rewards on weekly round-ups. Also, it is working on helping customers counter rising prices by allowing them to save when they shop.

Further, the card carries no monthly fees, subscription fees, in-network ATM fees, overdraft fees or account minimum fees. The customers will be provided 24/7 phone support, in-app educational resources and access to a large selection of assets through Robinhood.

Stock Rating

Following the news, JMP Securities analyst Devin Ryan maintained a Buy rating on Robinhood with a price target of $45 (235.3% upside potential from current levels).

Ryan said, “We estimate the offering can represent a material direct contribution to revenues over time primarily as an accelerant around asset gathering into both the cash account and investment account (higher interest rate related revenue, including greater sensitivity to higher interest rates, and potentially higher trading and related revenues on higher balances), and higher transaction fees from card usage.”

Based on five Buys, five Holds and two Sells, the stock has a Hold consensus rating. Robinhood’s average price target of $19 implies 41.6% upside potential from current levels. Shares have tanked 61.5% over the past year.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into HOOD’s performance.

According to the tool, the Robinhood website recorded a 1.1% monthly increase in global visits in February, compared to the previous year. However, the footfall on the company’s website has declined 68.8% year-to-date against the same period last year.

Conclusion

Robinhood is not the solo player offering the “Spare change” investing option to its customers. However, having tapped the changing card needs among younger users, Robinhood is likely to benefit.

Also, the rewards programs and simplicity of investing is likely to attract customers and allow Robinhood to showcase its other products.

Download the TipRanks mobile app now

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Read full Disclaimer & Disclosure