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1 Stock to Buy, 1 Stock to Sell: Robinhood vs. Dollar General

Wesley ParkSunday, Dec 1, 2024 9:17 am ET

3min read

In the ever-evolving world of investments, it's essential to stay informed and strategic. This week, we'll explore two prominent stocks: Robinhood (HOOD) and Dollar General (DG), and determine which one deserves a spot in your portfolio.

First, let's take a closer look at Robinhood. The popular retail brokerage platform has seen impressive growth, with Q3 2024 revenues up 36% YoY to $637M. This growth is driven by a 72% increase in transaction-based revenues, thanks to new offerings like Robinhood Legend, options, futures, and a realized P&L tool. With funded customers increasing by 1M YoY to 24.3M, Robinhood's stock has surged 40% YTD, making it an attractive buy.

However, Robinhood's reliance on cryptocurrency transactions, which accounted for $126M in Q1 2024, poses both opportunities and challenges. While cryptocurrency transactions have been a significant driver of revenue growth, they also expose Robinhood to regulatory uncertainty and potential enforcement actions. The SEC's Wells Notice in April 2024 underscores this risk.

On the other hand, Dollar General has seen mixed results. In Q2 2024, the discount retailer reported a 4.2% increase in net sales, driven by new store sales contributions and same-store sales growth. However, operating profit decreased 20.6% to $550.0M, primarily due to increased markdowns, inventory damages, and a greater proportion of sales coming from the lower-margin consumables category. Despite these challenges, Dollar General's commitment to enhancing its value and convenience offering, as well as the in-store experience for both customers and associates, positions it well for long-term growth.

DG Net Income YoY, Net Income

In conclusion, while Robinhood's impressive growth and innovative offerings make it a compelling 'buy' this week, its reliance on cryptocurrency transactions and regulatory uncertainty pose significant risks. Conversely, Dollar General's commitment to enhancing its value proposition and navigating economic challenges makes it an attractive investment opportunity. By considering these data-driven insights, investors can make informed decisions in this dynamic market landscape.

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StephCurryInTheHouse

12/01

$HOOD The stock is set to open at $39 tonight and is expected to close at $40 tomorrow.

DoU92

Check out our stock analysis on Robinhood Markets, Inc. (HOOD): https://youtu.be/CooEjIGPu_I

Pin-Last

The SEC has given the green light to a 24-hour stock exchange, shaking up traditional trading hours and demanding the attention of all retail investors. This could be a groundbreaking development for the American securities market, though it hasn't made its way here yet. If it has, kindly remove it. Background to the story: Yesterday, the SEC gave 24 Exchange, backed by Point72 Ventures, the go-ahead for its second application. This comes as pressure mounts for longer trading hours, a move already made by Charles Schwab Corp. 24 Exchange plans to roll out its new exchange in two phases: regular trading hours first, then extending to overnight sessions from Sunday to Friday. A one-hour operational pause will be built into each trading day for routine software upgrades and functionality testing. This newfound accessibility comes on the heels of other developments, like Robinhood Markets Inc.'s 24-hour trading of over 1,000 tickers and NYSE Arca trading extending to 22 hours per day. Intercontinental Exchange Inc., the parent company of the NYSE, has also filed for this. According to Dmitri Galinov, CEO and founder of 24X, "Traders are most at-risk when the market is closed in their geographic location." This new 24-hour exchange seeks to address this issue, providing continuous U.S. equities trading. It's worth noting that 24 Exchange shifted its focus from cryptocurrency trading in 2023, discontinuing its spot crypto product due to regulatory pressures and declining interest following the FTX collapse. This pivot led to yesterday's milestone approval.

NinjaImaginary2775

$HOOD For the investor day, what do you think we should focus on? Early access to futures? An announcement about the next event contract? Or maybe something completely new and exciting?

SeriousTsuki

$HOOD has an upcoming event on December 04, which is an Investor Day. The options expiring on December 06 that cover this event have an implied move of ±8.2%. For more information, check out this link: https://tinyurl.com/26qc5c96

Argothaught

HOOD's crypto exposure is a double-edged sword. Regulatory risks are real, but it's also a growth driver. 🤔

Relevations

DG's strategy feels like a marathon, not a sprint. They're focusing on the right things for the future.

ZhangtheGreat

$HOOD's growth is insane, but crypto's a wild west. 🤑

West-Bodybuilder-867

DG's markdowns are a bummer, but they're playing the long game. I'm holding $HOOD for now, but keeping an eye on DG's turnaround.

Mean_Dip_7001

Dollar General's commitment to customer experience is solid. They're not just about cheap prices, they're about convenience too.

Affectionate_You_502

Robinhood's user base is massive. 24.3M funded customers is no joke. They're a force to be reckoned with.

vaxop

DG's markdowns are a red flag, not a green light

tostitostiesto

HOOD's crypto exposure feels like a ticking time bomb

DeFi_Ry

If you're into meme stocks, HOOD might be a wild ride. But watch out for those regulatory waves.

DG's consumables shift might hurt margins, watch closely