On Tuesday, Robinhood Markets Inc (NASDAQ: HOOD) said it plans to acquire TradePMR, a custodial and portfolio management platform specializing in registered investment advisors (RIAs).
The deal, valued at approximately $300 million in cash and stock, is set to close in the first half of 2025. It is expected to expand Robinhood's reach into wealth management and cater to a more affluent client base.
This strategic move will allow TradePMR's RIAs to seamlessly access Robinhood's growing client network while offering existing Robinhood users enhanced advisory services.
Based in Gainesville, Florida, TradePMR oversees more than $40 billion in assets under administration. As part of the deal, the TradePMR team will integrate with Robinhood to streamline operations and bolster its service offerings.
Robinhood has steadily diversified its portfolio to compete with established players such as Charles Schwab Corp (NYSE: SCHW) and Fidelity Investments, Bloomberg reports.
The company has rolled out new features, including cryptocurrency trading, a credit card, and election betting.
Chief Brokerage Officer Steve Quirk highlighted to Bloomberg the importance of addressing the imminent generational wealth transfer, which will likely redefine advisory services as younger investors inherit substantial assets.
TradePMR's CEO, Robb Baldwin, emphasized to Bloomberg the synergy between Robinhood's younger investor demographic and TradePMR's advisory expertise.
The partnership aims to mitigate challenges traditionally faced by advisors, such as losing clients during asset transfers to heirs or spouses. Citigroup acted as Robinhood's financial advisor, while Lazard advised TradePMR on the transaction.
Robinhood Markets stock surged 183% year-to-date.
Robinhood reported a third-quarter revenue of $637 million, which was up by 36.4%, but it missed the analyst consensus of $651 million.
Needham upgraded Robinhood to Buy, projecting gains from pro-crypto policies under a potential Donald Trump administration.
Analyst John Todaro highlighted Robinhood's expanded crypto offerings, expecting further additions and market share growth. Todaro noted that Robinhood's diverse services, including equities and crypto, position it for stable revenue amid market shifts. A $40 price target reflects expectations for growth driven by crypto leverage and one-stop financial service appeal.
Price Action: HOOD stock is up 3.22% at $36.13 at last check Tuesday.