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Robinhood Markets (HOOD)
NASDAQ:HOOD
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Robinhood Markets
(NASDAQ:HOOD)
63Neutral
Positive Factors
Market Share Gains
Trading revenue run-rating 10% ahead of 1Q MSe and 6% ahead of cons supported by market share gains.
Regulatory Clarity
Recent regulatory changes can help HOOD's crypto offering close the gap versus competition, with a clearer path to offering more tokens.
Negative Factors
Client Asset Under Custody Decline
Client AUC declined -10% m/m to $187.4b; that's -8% below 1Q25 MSe.
Robinhood Markets (HOOD) vs. S&P 500 (SPY)
Market Cap
$32.20B
Dividend YieldN/A
Average Volume (3M)38.41M
Price to Earnings (P/E)23.3
Beta (1Y)2.55
Revenue Growth57.26%
EPS GrowthN/A
CountryUS
Employees2,300
SectorTechnology
Sector Strength45
IndustryCapital Markets
Share Statistics
EPS (TTM)1.56
Shares Outstanding767,947,900
10 Day Avg. Volume53,907,487
30 Day Avg. Volume38,413,794
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)13.10
Price to Cash Flow (P/CF)4.40
P/FCF Ratio3.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.00Price Target Upside82.43% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
Robinhood Markets Business Overview & Revenue Model
Company DescriptionRobinhood Markets Inc is creating a modern financial services platform. It designs its own products and services and delivers them through a single, app-based cloud platform supported by proprietary technology. Its vertically integrated platform has enabled the introduction of new products and services such as cryptocurrency trading, dividend reinvestment, fractional shares, recurring investments, and IPO Access. It earns transaction-based revenues from routing user orders for options, equities, and cryptocurrencies to market makers when a routed order is executed.
How the Company Makes MoneyRobinhood primarily generates revenue through a practice known as payment for order flow, where it receives payments from market makers in exchange for routing users' trades to them. Additionally, Robinhood earns interest income from users' cash deposits and margin balances. The company also offers a premium subscription service called Robinhood Gold, which provides users with enhanced features such as research reports, larger instant deposits, and access to margin trading for a monthly fee. Another revenue source is the interest earned on securities lending, where Robinhood lends shares held in users' accounts to other financial institutions. Partnerships and other financial activities may also contribute to its earnings, though these are less significant compared to its primary revenue streams.
Robinhood Markets Financial Statement Overview
Summary
Robinhood Markets exhibits significant improvements in revenue and profitability TTM, overcoming past financial challenges. The balance sheet is strengthened by eliminating debt, though cash flow management requires attention due to recent negative trends. Overall, the company shows promising recovery indicators, but vigilance is necessary to maintain momentum and address liquidity concerns.Income Statement
Robinhood's revenue showed strong growth with a 19.2% increase TTM, driven by a robust gross profit margin of 94%. The net profit margin also improved significantly from a negative position to 62.7% TTM, reflecting enhanced profitability. Despite past EBIT and EBITDA losses, TTM margins turned positive to 15.7% and 25.4%, respectively, indicating operational improvements. However, the historical volatility in earnings remains a concern.75
Positive
Balance Sheet
The balance sheet is solid with a debt-free position in the latest period, substantially improving the debt-to-equity ratio. The return on equity has shifted from negative to 17.7% TTM, showing better use of shareholder funds. The equity ratio stands at 30.4%, reflecting a balanced capital structure. However, the declining asset base and past leverage trends pose potential risks.68
Positive
Cash Flow
Cash flows show mixed trends, with operating cash flow turning negative TTM, raising concerns about liquidity management. The free cash flow, also negative, reflects pressure on cash reserves. Despite this, past periods demonstrated strong cash flow generation, which may help stabilize future operations. The cash flow to net income ratio is negative, indicating a need for improved cash conversion efficiency.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.95B | 1.89B | 1.38B | 1.84B | 958.83M | Gross Profit |
| 2.60B | 1.71B | 1.17B | 1.35B | 484.28M | EBIT |
| 1.05B | -513.00M | -942.00M | -3.67B | 13.78M | EBITDA |
| 1.13B | -442.00M | -881.00M | -3.64B | 23.72M | Net Income Common Stockholders |
| 1.41B | -541.00M | -1.03B | -3.69B | 2.85M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 7.26B | 4.83B | 7.34B | 8.13B | 1.40B | Total Assets |
| 26.19B | 32.33B | 23.34B | 19.77B | 10.99B | Total Debt |
| 7.46B | 3.55B | 2.98B | 5.64B | 1.98B | Net Debt |
| 3.13B | -1.29B | -3.36B | -617.55M | 572.59M | Total Liabilities |
| 18.21B | 25.64B | 16.38B | 12.48B | 8.86B | Stockholders Equity |
| 7.97B | 6.70B | 6.96B | 7.29B | 2.12B |
| Cash Flow | Free Cash Flow | |||
| -170.00M | 1.16B | -909.00M | -968.43M | 1.84B | Operating Cash Flow |
| -157.00M | 1.18B | -852.00M | -884.77M | 1.88B | Investing Cash Flow |
| -148.00M | -582.00M | -60.00M | -237.88M | -32.33M | Financing Cash Flow |
| -345.00M | -610.00M | -1.82B | 5.20B | 1.28B |
Robinhood Markets Technical Analysis
Negative
38.92
Price Trends
48.20
Negative
40.92
Negative
31.30
Positive
Market Momentum
-3.16
Positive
36.88
Neutral
8.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HOOD, the sentiment is Negative. The current price of 38.92 is below the 20-day moving average (MA) of 49.87, below the 50-day MA of 48.20, and above the 200-day MA of 31.30, indicating a neutral trend. The MACD of -3.16 indicates Positive momentum. The RSI at 36.88 is Neutral, neither overbought nor oversold. The STOCH value of 8.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HOOD.
Robinhood Markets Risk Analysis
Robinhood Markets disclosed 62 risk factors in its most recent earnings report. Robinhood Markets reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Robinhood Markets Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $180.70B | 14.10 | 13.16% | 3.23% | 7.16% | 53.77% | |
74 Outperform | $165.83B | 13.11 | 11.95% | 2.21% | 14.80% | 77.97% | |
73 Outperform | $135.12B | 23.85 | 13.30% | 1.41% | 1.87% | 17.63% | |
71 Outperform | $1.07B | ― | 11.11% | ― | ― | ― | |
68 Neutral | $71.98B | 24.13 | 19.20% | 0.60% | 19.54% | 22.23% | |
63 Neutral | $32.20B | 23.28 | 19.24% | ― | 57.26% | ― | |
58 Neutral | $21.35B | 9.96 | -19.72% | 2.38% | 5.03% | -22.83% |
* Technology Sector Average
Performance Comparison
HOOD
Robinhood Markets
38.92
21.76
126.81%
IBKR
Interactive Brokers
171.14
63.38
58.82%
MS
Morgan Stanley
114.00
27.52
31.82%
SCHW
Charles Schwab
74.22
8.02
12.11%
GS
Goldman Sachs Group
535.71
151.87
39.57%
AMTD
AMTD IDEA Group
1.03
-0.72
-41.14%
Robinhood Markets Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -30.39% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance by Robinhood in 2024, with significant revenue growth, increased market share, and successful new product launches. However, the company faces challenges related to regulatory clarity and a cautious approach to credit card expansion.Highlights
Record-Breaking Revenue
Robinhood achieved over $1 billion in Q4 revenue for the first time, contributing to a record-breaking year with over $3 billion in 2024 revenue, up 58% from 2023.
Growth in Market Share and Subscribers
Market share for equities and options increased by 30% year-over-year, and gold subscribers reached a record of 2.6 million, marking 80% growth year-over-year.
Positive Financial Performance
Adjusted EBITDA rose over 160% to $1.4 billion, with a margin of 48%. Earnings per share reached $1.56 in the first full year of positive net income.
Innovative Product Launches
Introduction of the Robinhood Legend desktop platform and new derivatives business, including futures and event contracts, showing strong early success.
Strong Start to 2025
January saw the second-highest net deposits ever and all-time high option volumes, with margin balances doubling to over $8 billion.
Lowlights
Regulatory Challenges
There is a lack of regulatory clarity for the expansion of crypto offerings and prediction markets, particularly in the U.S.
Credit Card Rollout Caution
The rollout of the Robinhood Gold credit card has been slower due to a cautious approach to manage credit risks.
Company Guidance
During Robinhood's Q4 and Full-Year 2024 Earnings Call, significant growth metrics were highlighted, reflecting a strong financial performance and strategic advancements. The company achieved over $1 billion in quarterly revenue and over $3 billion for the full year, marking a 58% increase from 2023. Market share rose by 30% year-over-year in equities and options, while net deposits exceeded $50 billion, growing nearly 50%. Robinhood Gold subscribers reached a record 2.6 million, an 80% increase year-over-year, with a 10% attach rate among the overall customer base. Financial measures like adjusted EBITDA surged over 160% to $1.4 billion, with an adjusted EBITDA margin of 48%. Earnings per share for 2024 were reported at $1.56. The company plans to continue its momentum in 2025 with expectations of double-digit revenue growth driven by product innovation and market share expansion.Robinhood Markets Corporate Events
Regulatory Filings and Compliance
Robinhood Markets Releases Q4 2024 Order Routing Reports
Neutral
Jan 31, 2025
Robinhood Markets released its SEC Rule 606(a) order routing reports for the fourth quarter of 2024, detailing the payment for order flow and routing practices of its broker-dealer subsidiaries. These reports highlight the revenue-sharing agreements between Robinhood Financial LLC and Robinhood Securities, LLC, and provide insights into the routing of non-directed orders to various market centers, but do not reflect consolidated company results.
Executive/Board Changes
Robinhood Markets Expands Board with Christopher Payne
Positive
Dec 18, 2024
Robinhood Markets has appointed Christopher Payne to its Board of Directors, expanding the board from eight to nine members. Payne, an independent director with extensive experience in technology and product development, will also serve on the Safety, Risk and Regulatory Committee. His background includes leadership roles at DoorDash, Tinder, eBay, Microsoft, and Amazon, which positions him as a valuable asset to Robinhood in its continued growth and mission to democratize finance.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.