Why Robinhood Stock Popped on Monday
Key Points
Robinhood will buy two businesses to expand into Indonesia.
No price was named for the acquisitions.
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Robinhood (NASDAQ: HOOD) stock gained 2.6% through 2:30 p.m. ET Monday, and for a change, this move has nothing to do with cryptocurrencies. (Or does it?)
It has to do with... Indonesia.
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Image source: Robinhood Markets.
Robinhood International
Yes, Indonesia, the island chain nation that's Australia's northern neighbor. As Robinhood announced over the weekend, it has agreed to acquire Indonesian brokerage PT Buana Capital Sekuritas -- and also licensed digital asset trader PT Pedagang Aset Kripto.
You don't have to speak fluent Bahasa Indonesia to figure out that this really is a cryptocurrency story after all. (Which is unsurprising. After all, crypto trading is currently the fastest-growing business within Robinhood.)
What's Robinhood up to in Indonesia?
Announcing the acquisitions, Robinhood went out of its way to note that Indonesia boasts not only 19 million ordinary investors, but also 17 million crypto investors. (I'd call them crypto traders, but to-may-to, tom-ah-to).
This makes Indonesia a ripe market for Robinhood, and a good place to "mark Robinhood's entry into Indonesia" and "accelerat[e] our expansion across Southeast Asia and globally."
Is Robinhood stock a buy?
Still, investors in Robinhood stock might have wished the company would provide a bit more detail on its latest prize. Announcing the acquisition, Robinhood declined to say how much it will pay for either its new brokerage or its new crypto trader -- or how much it expects the Indonesian businesses to boost its growth rate.
Valued north of $119 billion, but with only $2.2 billion in net income, Robinhood shares cost nearly 54 times earnings today. Analysts don't expect Robinhood to grow earnings faster than 22% annually over the next five years, though, making for a pricey-seeming 2.5 PEG ratio on the stock.
Maybe adding Indonesia will change that growth rate for the better. But also maybe not.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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