Wall Street sentiment was optimistic this morning in early trading with a rotation back into tech shares. Tech and growth stocks surged in 2020, partly due to the effects of no commission trading and fractional share ownership made possible by Robinhood.
Robinhood was the first brokerage to offer no commission trading, eventually forcing its competitors to reduce their commissions. It’s less than eight years old, yet it already has 13 million users on its platform and over $25 billion in assets under management. In August, Robinhood overtook Schwab (SCHW) to become the largest broker in terms of the number of trades on its platform.
Robinhood is currently a private company, so retail investors haven’t been able to participate in its growth, although there is chatter that the company may IPO in the next year.
Our trade alert for today features a publicly traded firm for our readers who want to invest in the next generation of disruptive brokers.
Known as the “Robinhood of China,” Futu Holdings (FUTU) has over 10 million users with total assets under management of $10 billion.
Unlike many early-stage, tech companies, FUTU is already profitable. Over the last 12 months, FUTU earned $105 million in earnings, and it expects earnings growth of 67% in 2021.
This type of earnings growth has translated into analysts becoming increasingly optimistic about the stock’s prospects. Estimates have been lifted which makes sense given the explosive growth in retail trading, taking place around the globe. Over the last three months, 2021 earnings estimates have increased by 15% and 2022 estimates by 12%.
FUTU is expanding into markets all over Asia, and its product is especially popular among Generation Z and Millennials. Within the markets that it’s operating, FUTU is increasing penetration especially among the underbanked. As more people in these regions enter the middle class, FUTU’s potential customer base increases.
Its growth potential is clear from its last earnings report in which users increased by 137% and total client assets increased by 178%. Overall, total trading volume increased by 371%. FUTU’s product has become viral just like Robinhood has in the US and seen an acceleration during the pandemic. As a result, FUTU hit its 2020 growth targets by Q3.
FUTU is an impressive Chinese fintech company bringing trading and investing into the 21st century. The company should continue to see significant growth, as the legacy brokers are ripe for disruption and a new generation of investors is eager to get involved in markets. Out of the 5 analysts who cover the stock, 4 have a Strong Buy or Buy rating.
Where to invest $1,000 right now...
Before you consider buying Futu Holdings, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Futu Holdings.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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