Robinhood Markets, Inc. (HOOD) | Investment Case

1. Company Snapshot

1.a. Company Description

Robinhood Markets, Inc.operates financial services platform in the United States.Its platform allows users to invest in stocks, exchange-traded funds (ETFs), options, gold, and cryptocurrencies.

The company also offers various learning and education solutions comprise Snacks, a digest of business news stories; Learn, which is a collection of approximately articles, including guides, feature tutorials, and financial dictionary; Newsfeeds that offer access to free premium news from various sites, such as Barron's, Reuters, and The Wall Street Journal; lists and alerts, which allow users to create custom watchlists and alerts to monitor securities, ETFs, and cryptocurrencies, as well as cash management services; and offers First trade recommendations to all new customers who have yet to place a trade.Robinhood Markets, Inc.was incorporated in 2013 and is headquartered in Menlo Park, California.

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1.b. Last Insights on HOOD

Breaking News: Robinhood Markets Inc has seen a flurry of activity recently. Edgestream Partners LP reduced its stake in the company by 50.2% in Q2, selling 59361 shares. Meanwhile, the company continues to expand its offerings, including prediction markets, which has generated significant interest on Wall Street. With Bitcoin showing signs of a steady rebound, crypto-centric stocks like HOOD are gaining attention. Some analysts recommend buying HOOD, citing its potential for growth. HOOD has been a recent addition to the S&P 500 and has become the top performer in the index.

1.c. Company Highlights

Last Price	137.08
Change Percentage	2.57%
Open	133.22
Previous Close	133.64
Market Cap ( Millions)	121323
Volume	20189699
Year High	153.86
Year Low	29.66
M A 50	132.98
M A 200	90.11

FCF Yield	0.95%
Dividend Yield	0.00%
ROE	26.95%
Debt / Equity	225.10%
Net Debt / EBIDTA	716.83%
Price To Book	14.23
Price Earnings Ratio	55.56
Price To FCF	105.77
Price To sales	28.86
EV / EBITDA	65.33

2. Robinhood's Q3 2025 Earnings: A Strong Performance

Robinhood's Q3 2025 earnings report highlighted a strong financial performance, with revenues surging over 100% year-over-year to a record $1.3 billion. The company's earnings per share (EPS) came in at $0.61, beating analyst estimates of $0.538. The significant revenue growth was driven by record equity and option trading volumes, with October volumes being even stronger. The company's adjusted OpEx and share-based compensation came in at $613 million, as noted by Jason Warnick, CFO, prior to his retirement.

Publication Date: Nov -10

                                    📋 Highlights
                                    Revenue Surge::
                                                Q3 2025 revenue hit record $1.3B, up 100% YoY.
Prediction Markets Growth::
                                                Q3 contracts reached $2.3B, $2.5B in October alone.
Wallet Share Expansion::
                                                Assets surpassed $1T, with $1B+ in Robinhood Strategies and $8B annual spend via Gold Card.
International Revenue Goal::
                                                Aiming for >50% revenue from non-U.S. and non-retail institutional customers.
Tokenization Progress::
                                                400+ tokenized equities in Phase 1, with plans for secondary trading and DeFi integration.

                                

Business Segment Performance

The company's three focus areas - active traders, wallet share, and global financial ecosystem - all showed significant progress. In active traders, Robinhood rolled out new products, including brokerage updates and AI-driven custom indicators. In wallet share, assets under management reached over 1/3 of $1 trillion, with long-term money assets, including retirement, exceeding $25 billion. The Robinhood Gold Card has seen significant adoption, with over 0.5 million cardholders and $8 billion in annual spend.

Prediction Markets and Crypto

Prediction Markets, launched about a year ago, reached $2.3 billion contracts in Q3 and $2.5 billion in October alone. The company is leveraging its distribution and infrastructure to drive growth in this area. On the crypto front, the blended take rate is around $0.60, with smart exchange routing showing robust interest. The company is also making progress in tokenization, with a three-phase rollout plan, and has seen significant growth in its Bitstamp acquisition, with volumes up 60-plus percent quarter-over-quarter.

Valuation and Outlook

Given the company's strong financial performance, we can examine the valuation metrics to understand what's priced in. The Price-to-Sales Ratio stands at 27.44, while the Price-to-Book Ratio is at 13.53. The EV/EBITDA ratio is 62.48, indicating a premium valuation. Analysts estimate next year's revenue growth at 23.2%, which may not be sufficient to justify the current valuation multiples. The company's focus on expanding its global financial ecosystem, prediction markets, and crypto offerings will be crucial in driving future growth.

Leadership Transition and Future Plans

The company has undergone a leadership transition, with Shiv Verma taking over as CFO. Verma has emphasized the company's goal of growing earnings per share and free cash flow per share. The company is focused on making Robinhood a family financial hub, with features such as credit cards, banking offerings, and the ability to create accounts for children and household staff. The $100 trillion wealth transfer opportunity is a key area of focus, with the company looking to take an outsized share of it.

3. NewsRoom

The 'retail investor' is alive and well: Robinhood CEO

Dec -04

Source: youtube.com

Dow Jones Today: Major Stock Indexes Little Changed; Weekly Jobless Claims Unexpectedly Fall; Inflation Data on Tap Tomorrow

Dec -04

Source: investopedia.com

Will Legal Action Slow HOOD's Event Contracts Business Growth?

Dec -04

Source: zacks.com

Prediction-Markets Data Is On CNN Now. Expect to See It Just About Everywhere Soon

Dec -04

Source: investopedia.com

Buy 3 Crypto-Centric Stocks as Bitcoin Shows Signs of Steady Rebound

Dec -03

Source: zacks.com

The Best S&P 500 Stock Has Been In The Index Less Than 3 Months

Dec -03

Source: investors.com

Edgestream Partners L.P. Sells 59,361 Shares of Robinhood Markets, Inc. $HOOD

Dec -03

Source: defenseworld.net

Should You Buy Robinhood Stock After Its Recent Correction? The Answer Might Surprise You

Dec -03

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.40%)

6. Segments

Options

Expected Growth: 8%

Robinhood's 8% growth is driven by increasing adoption of commission-free trading, expansion into new products such as options and cryptocurrencies, and growing popularity among younger investors. Additionally, the company's user-friendly interface, low fees, and strategic partnerships contribute to its rapid growth.

Interest on Corporate Cash and Investments

Expected Growth: 7%

Robinhood's 7% growth in Interest on Corporate Cash and Investments is driven by increasing cash reserves, strategic investments in high-yield instruments, and a rising interest rate environment. Additionally, the company's growing user base and increasing cash holdings from brokerage accounts contribute to this growth.

Margin Interest

Expected Growth: 10%

Robinhood's 10% margin interest growth is driven by increasing trading volumes, rising interest rates, and a growing customer base. The company's commission-free trading model and user-friendly interface attract more users, leading to higher margin balances and interest income. Additionally, the Federal Reserve's rate hikes boost interest income from cash and securities lending, contributing to the segment's growth.

Interest on Segregated Cash and Cash Equivalents and Deposits

Expected Growth: 8%

Robinhood's 8% growth in Interest on Segregated Cash and Cash Equivalents and Deposits is driven by increasing user base, rising brokerage accounts, and higher cash balances. Additionally, the company's expansion into new products, such as high-yield savings accounts, and its competitive interest rates also contribute to this growth.

Other Revenues

Expected Growth: 6%

Robinhood's Other Revenues growth is driven by increasing adoption of its cryptocurrency trading platform, expansion of its options trading business, and rising interest income from uninvested cash balances. Additionally, the company's growing user base and rising average revenue per user (ARPU) contribute to the growth.

Cryptocurrencies

Expected Growth: 12%

Robinhood's 12% growth in Cryptocurrencies is driven by increasing adoption, simplicity, and accessibility. Key drivers include: 1) rising mainstream acceptance, 2) commission-free trading, 3) user-friendly interface, 4) expanding cryptocurrency offerings, and 5) growing demand for diversification in investment portfolios.

Cash Sweep, Net

Expected Growth: 9%

Robinhood's Cash Sweep growth is driven by increasing adoption of its brokerage services, expansion of investment products, and rising interest rates. The 9% growth is also attributed to the company's strategic partnerships, user-friendly interface, and commission-free trading model, which attract and retain customers, resulting in higher cash balances and sweep revenue.

Equities

Expected Growth: 11%

Robinhood's 11% growth in equities is driven by increasing adoption of commission-free trading, expansion of options and ETF offerings, and growing popularity among millennials and Gen Z investors. Additionally, the company's user-friendly interface, low fees, and innovative products such as fractional shares and IPO access contribute to its rapid growth.

Securities Lending, Net

Expected Growth: 8%

Robinhood's 8% growth in Securities Lending, Net is driven by increasing demand for margin trading, expansion of its customer base, and rising interest rates. Additionally, the company's commission-free trading model and user-friendly interface have attracted more users, leading to higher lending volumes and revenue. Furthermore, strategic partnerships and investments in technology have improved operational efficiency, contributing to the segment's growth.

Other

Expected Growth: 7%

Robinhood's 'Other' segment, with 7% growth, is driven by increasing demand for its cryptocurrency trading services, expansion of its options trading business, and growing interest in its cash management products. Additionally, the company's investments in technology and infrastructure have improved scalability, enabling it to handle higher trading volumes and support its growing customer base.

Interest Expenses Related to Credit Facilities

Expected Growth: 5%

Robinhood's 5% growth in Interest Expenses Related to Credit Facilities is driven by increasing customer base and trading activity, leading to higher margin lending and options trading. Additionally, rising interest rates and expansion of credit products, such as Robinhood Gold, contribute to the growth.

Credit Card, Net

Expected Growth: 9%

Robinhood's 9% growth in Net from Credit Card segment is driven by increasing adoption of cashback and rewards programs, rising online transactions, and growing demand for contactless payments. Additionally, the company's expansion into new markets, strategic partnerships, and investments in digital infrastructure have contributed to this growth.

7. Detailed Products

Robinhood Trading App

A mobile-first brokerage platform that allows users to buy and sell stocks, ETFs, options, and cryptocurrencies with no commission fees.

Robinhood Options

A platform that allows users to trade options contracts with no commission fees.

Robinhood Crypto

A platform that allows users to buy and sell cryptocurrencies like Bitcoin and Ethereum with no commission fees.

Robinhood Gold

A premium membership program that offers extended trading hours, larger instant deposits, and Level II quotes.

Robinhood Snacks

A daily newsletter that provides market news, insights, and analysis.

Robinhood Learn

A platform that provides educational resources and tools to help investors learn about investing and personal finance.

8. Robinhood Markets, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Robinhood's commission-free trading model and user-friendly interface make it difficult for substitutes to emerge, reducing the threat of substitutes.

Bargaining Power Of Customers

While customers have some bargaining power due to the availability of alternative brokerages, Robinhood's low prices and user-friendly interface reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Robinhood's suppliers, such as market makers and high-frequency trading firms, have limited bargaining power due to the company's scale and negotiating power.

Threat Of New Entrants

The threat of new entrants is high due to the low barriers to entry in the online brokerage industry, and the potential for new fintech companies to emerge and disrupt the market.

Intensity Of Rivalry

The online brokerage industry is highly competitive, with established players such as Fidelity, Charles Schwab, and E*TRADE, as well as new entrants, creating a high level of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	43.52%
Debt Cost	3.95%
Equity Weight	56.48%
Equity Cost	12.66%
WACC	8.87%
Leverage	77.05%

11. Quality Control: Robinhood Markets, Inc. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Toast

A-Score: 4.6/10

Value: 0.9

Growth: 9.1

Quality: 6.4

Yield: 0.0

Momentum: 7.5

Volatility: 4.0

1-Year Total Return ->

Altair Engineering

A-Score: 4.5/10

Value: 2.0

Growth: 6.7

Quality: 5.3

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

Robinhood Markets

A-Score: 4.5/10

Value: 0.3

Growth: 7.2

Quality: 7.0

Yield: 0.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

Affirm

A-Score: 3.8/10

Value: 0.7

Growth: 9.1

Quality: 3.1

Yield: 0.0

Momentum: 8.0

Volatility: 2.0

1-Year Total Return ->

DigitalOcean

A-Score: 3.8/10

Value: 3.8

Growth: 9.2

Quality: 5.3

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

HashiCorp

A-Score: 3.8/10

Value: 4.2

Growth: 4.4

Quality: 3.6

Yield: 0.0

Momentum: 5.5

Volatility: 5.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

57.90%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.87%

Robinhood Markets, Inc. - US7707001027

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HOOD

1.c. Company Highlights

Strong Momentum

Fairly Valued

Average Growth

Earnings Beats

Revenues Beats

Earnings Miss

Revenues Miss

Average Quality

Expensive

Medium Volatility

Better Quality

2. Robinhood's Q3 2025 Earnings: A Strong Performance

Business Segment Performance

Prediction Markets and Crypto

Valuation and Outlook

Leadership Transition and Future Plans

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.40%)

6. Segments

Options

Expected Growth: 8%

Interest on Corporate Cash and Investments

Expected Growth: 7%

Margin Interest

Expected Growth: 10%

Interest on Segregated Cash and Cash Equivalents and Deposits

Expected Growth: 8%

Other Revenues

Expected Growth: 6%

Cryptocurrencies

Expected Growth: 12%

Cash Sweep, Net

Expected Growth: 9%

Equities

Expected Growth: 11%

Securities Lending, Net

Expected Growth: 8%

Other

Expected Growth: 7%

Interest Expenses Related to Credit Facilities

Expected Growth: 5%

Credit Card, Net

Expected Growth: 9%

7. Detailed Products

Robinhood Trading App

Robinhood Options

Robinhood Crypto

Robinhood Gold

Robinhood Snacks

Robinhood Learn

8. Robinhood Markets, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Robinhood Markets, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA