Robinhood (HOOD) AI Stock Analysis

• Market Cap: $115.80B
• Dividend Yield: N/A
• Average Volume (3M): 29.82M
• Price to Earnings (P/E): 54.1
• Beta (1Y): 2.83
• Revenue Growth: 73.48%
• EPS Growth: 315.24%
• Country: US
• Employees: 2,300
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Capital Markets
• EPS (TTM): 0.61
• Shares Outstanding: 773,963,700
• 10 Day Avg. Volume: 27,582,145
• 30 Day Avg. Volume: 29,822,712
• PEG Ratio: -0.06
• Price to Book (P/B): 4.12
• Price to Sales (P/S): 11.13
• P/FCF Ratio: -193.12
• Enterprise Value/Market Cap: 1.26
• Enterprise Value/Revenue: 34.83
• Enterprise Value/Gross Profit: 41.18
• Enterprise Value/Ebitda: 70.19
• 1Y Price Target: $149.28
• Price Target Upside: 14.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): 1.99
• Revenue Forecast (FY): $4.48B

• Rating: 68 Neutral
• Price Target: $139.00 ▲(6.63% Upside)

Robinhood's strong financial performance and positive earnings call sentiment are offset by high valuation concerns and technical indicators suggesting short-term weakness. The company's growth prospects are promising, but operational challenges and high leverage require attention.

Positive Factors

Revenue Growth

Robinhood's significant revenue growth indicates strong customer engagement and increased asset inflow, supporting long-term business expansion.

International Expansion

The expansion into international markets, especially in the UK and EU, diversifies revenue streams and reduces reliance on the U.S. market.

Prediction Markets Growth

The rapid growth in prediction markets enhances Robinhood's product offerings and revenue diversification, strengthening its competitive position.

Negative Factors

Operational Expenses

Increased operational expenses can pressure margins and profitability, requiring efficient cost management to sustain long-term financial health.

AWS Outage

The AWS outage highlights potential vulnerabilities in platform resilience, necessitating improvements to ensure reliable service delivery.

Cash Flow Challenges

Declining free cash flow growth indicates potential cash management issues, impacting the company's ability to invest in growth opportunities.

Robinhood Business Overview & Revenue Model

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.

How the Company Makes Money

Robinhood generates revenue through several key streams, primarily including payment for order flow (PFOF), interest on cash balances, and subscription services. Payment for order flow involves routing customer orders to market makers and receiving a fee for executing those trades, which is a significant portion of its earnings. Additionally, Robinhood earns interest on uninvested cash in customer accounts and from its margin lending services. The company also offers a premium subscription service called Robinhood Gold, which provides users with advanced trading features and research tools for a monthly fee. Strategic partnerships with various financial institutions and technology providers further enhance its service offerings and contribute to its revenue.

Robinhood Financial Statement Overview

Summary

Robinhood shows strong revenue growth and profitability with impressive margins and a solid return on equity. However, increasing leverage and challenges in cash conversion and growth pose risks, necessitating careful management of debt and cash flow for long-term financial health.

Income Statement

Robinhood's income statement shows strong revenue growth with a TTM revenue growth rate of 17.86%. The company has impressive profitability metrics, with a gross profit margin of 86.66% and a net profit margin of 50.13% in the TTM period. The EBIT and EBITDA margins are also robust at 42.70% and 44.86%, respectively. These figures indicate a well-managed cost structure and efficient operations. However, the historical volatility in revenue growth and profitability, as seen in previous years, suggests potential risks in sustaining these high margins.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 1.57 in the TTM period, indicating a balanced approach to leveraging. The return on equity is healthy at 22.92%, showcasing effective use of equity capital. However, the equity ratio is not provided, which limits the analysis of asset financing. The increase in total debt over the years could pose a risk if not managed carefully, especially in volatile market conditions.

Cash Flow

The cash flow statement highlights a significant decline in free cash flow growth by 59.46% in the TTM period, which is a concern. The operating cash flow to net income ratio is low at 0.11, suggesting potential challenges in converting income into cash. However, the free cash flow to net income ratio is strong at 98.13%, indicating efficient cash generation relative to net income. The historical fluctuations in cash flow metrics suggest the need for improved cash management strategies.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.20B	2.95B	1.86B	1.36B	1.81B	958.00M
Gross Profit	3.56B	2.45B	1.41B	770.00M	1.31B	721.00M
EBITDA	2.09B	1.13B	-460.00M	-905.00M	-1.61B	23.00M
Net Income	2.19B	1.41B	-541.00M	-1.03B	-3.69B	7.00M
Balance Sheet
Total Assets	41.45B	26.19B	17.62B	23.34B	19.77B	10.99B
Cash, Cash Equivalents and Short-Term Investments	4.33B	10.50B	8.44B	7.85B	8.09B	2.21B
Total Debt	19.28B	7.46B	3.55B	1.83B	3.65B	1.92B
Total Liabilities	32.88B	18.21B	10.93B	16.38B	12.48B	11.04B
Stockholders Equity	8.57B	7.97B	6.70B	6.96B	7.29B	-55.32M
Cash Flow
Free Cash Flow	1.15B	-170.00M	1.16B	-909.00M	-968.43M	1.84B
Operating Cash Flow	1.18B	-157.00M	1.18B	-852.00M	-884.77M	1.88B
Investing Cash Flow	-5.56B	-148.00M	-582.00M	-60.00M	-237.88M	-32.33M
Financing Cash Flow	5.65B	-345.00M	-610.00M	0.00	5.20B	1.28B

Robinhood Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 130.36
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HOOD, the sentiment is Neutral. The current price of 130.36 is below the 20-day moving average (MA) of 137.28, above the 50-day MA of 130.11, and above the 200-day MA of 83.98, indicating a neutral trend. The MACD of 1.14 indicates Positive momentum. The RSI at 45.75 is Neutral, neither overbought nor oversold. The STOCH value of 27.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HOOD.

Robinhood Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IBKR	80 Outperform	$31.42B	33.98	19.82%	0.40%	11.88%	28.96%
SCHW	70 Outperform	$172.88B	22.33	17.04%	1.12%	5.90%	66.60%
HOOD	68 Neutral	$115.80B	54.12	27.82%	―	73.48%	315.24%
SOFI	68 Neutral	$34.02B	51.15	8.59%	―	22.40%	215.81%
COIN	68 Neutral	$79.60B	26.76	26.00%	―	47.86%	96.46%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
BULL	47 Neutral	$4.77B	―	-3.09%	―	―	―