Companies have limits to their growth. A tree grows toward the sun, but not to the sun. To continue along a successful path, companies need to branch out and offer new products and services.
Ideally, these will be natural extensions of their existing products. If there’s a good fit, a company can continue to grow and even accelerate its growth before it starts to see a big slowdown.
For instance, brokerage Robinhood (HOOD) grew quickly thanks to offering zero fees and the ability to buy fractions of shares.
Now, they’re looking to expand into wealth management by acquiring registered investment advisory firm TradePMR.
The news pushed Robinhood shares to a new 52-week high. But with a bull market and increased stock trading underway, there’s likely more upside ahead into next year.
Robinhood is still on a growth path, with revenues up 37% over the past year, although it has yet to turn a full-year profit.
Action to take: Robinhood has positive momentum for shares here, and can still trend higher, especially if they’re able to increase growth and get into higher-margin financial services like wealth management. That should help make Robinhood consistently profitable and allow for the payment of a dividend over time.
For traders, the February 2025 $45 calls, last trading for about $2.40, can likely see mid-double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.