Robinhood Markets (HOOD) disrupted the brokerage industry with its commission-free trading model, attracting millions of young, first-time investors. But with most of its revenue tied to trading activity, one question looms large: Can the company sustain growth beyond the market’s highs and lows? Let’s dive into what Main Street Data reveals about Robinhood.
Robinhood’s Active Users
According to Main Street Data, Robinhood reported 14.9 million monthly active users in Q4 2024, reflecting a 36.7% year-over-year growth. However, this marks a 30% decline from its peak of over 21 million monthly active users in early 2021.
Notably, the user base spiked in 2021 during the pandemic and market boom. This period saw massive retail investor participation, especially with meme stocks and the rise of day trading. Later on, many of those users might have abandoned the platform after realizing the risks or simply because they were not engaged with more long-term investing strategies.
Robinhood Revenue Breakdown
In terms of revenue, Robinhood’s Q4 net revenues surged 115% year-over-year, reaching $1.01 billion. The largest portion of this, $672 million, came from transaction-based revenues, which surged by over 200% year-over-year. This suggests that despite a dip in user numbers since its peak in 2021, the platform continues to attract significant trading activity.
Meanwhile, net interest revenues stood at $296 million, marking a 25% year-over-year increase. This highlights Robinhood’s growing diversification in revenues beyond just trading commissions, which provides stability even when trading activity slows.
Additionally, last month, Robinhood, announced its expansion into the banking and wealth management sectors. The company also plans to integrate artificial intelligence (AI) to offer personalized financial advice, specifically tailored to millennials and Gen-Z investors. This strategic diversification could position Robinhood to capture a broader market.
In short, while Robinhood relies heavily on transaction-based revenue, its successful efforts to diversify income streams may help it navigate future market fluctuations.
Is HOOD Stock a Good Buy?
Turning to Wall Street, analysts remain cautiously optimistic about HOOD stock. According to TipRanks consensus, HOOD stock has a Moderate Buy rating, based on 13 Buys and six Holds assigned in the last three months. The Robinhood Markets share price target of $63.06 implies a 43% upside potential over current trading levels.
