Robinhood Markets (HOOD) AI Stock Analysis

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Robinhood Markets

(NASDAQ:HOOD)

Rating:76Outperform

Price Target:

$75.00

▲(18.73%Upside)

Robinhood's strong financial performance and strategic growth initiatives are driving its positive outlook. The technical indicators suggest robust market momentum, though careful attention is needed for cash flow management. The high valuation reflects expected growth, while the earnings call's positive sentiment enhances the stock's attractiveness.

Positive Factors

Financial Performance

Strong net deposits translated into a 37% annual growth rate, highlighting financial strength.

Product Expansion

HOOD's product expansion shows both breadth and depth, indicating the company's growing influence in the market.

Strategic Moves

The acquisition of Bitstamp and WonderFi is seen as a strategic move to increase HOOD's presence in the crypto market for institutional users and internationally.

Negative Factors

Cryptocurrency Market

Crypto volumes declined by 24% month-over-month, reflecting challenges in the cryptocurrency market.

Revenue Generation

Transactional revenues are trending 3% below consensus, suggesting weaker than expected revenue generation.

Trading Revenue

Trading revenue is running 6% below MSe and 3% below consensus, reflecting challenges in generating expected trading income.

Robinhood Markets (HOOD) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$55.75B

Dividend YieldN/A

Average Volume (3M)40.55M

Price to Earnings (P/E)36.1

Beta (1Y)2.64

Revenue Growth58.74%

EPS Growth1127.29%

CountryUS

Employees2,300

SectorTechnology

Sector Strength77

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.37

Shares Outstanding767,047,000

10 Day Avg. Volume36,325,318

30 Day Avg. Volume40,548,189

Financial Highlights & Ratios

PEG Ratio2.43

Price to Book (P/B)6.08

Price to Sales (P/S)0.00

P/FCF Ratio45.28

Enterprise Value/Market Cap0.79

Enterprise Value/Revenue4.03

Enterprise Value/Gross Profit20.12

Enterprise Value/Ebitda12.62

Forecast

1Y Price Target

$63.33

Price Target Upside0.25% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering19

Robinhood Markets Business Overview & Revenue Model

Company DescriptionRobinhood Markets, Inc. (HOOD) is a financial services company that operates in the fintech sector, primarily known for pioneering commission-free trading of stocks, options, and exchange-traded funds (ETFs) through its mobile app and website. Founded in 2013, Robinhood has democratized trading by making it accessible to a broader audience, particularly attracting millennial and Gen Z investors. The company also offers cryptocurrency trading, cash management services, and educational resources to empower users to participate in financial markets.

How the Company Makes MoneyRobinhood primarily generates revenue through a practice known as payment for order flow, where it receives compensation from market makers for directing customer trade orders to them. This allows Robinhood to offer commission-free trading to its users. Additionally, the company earns interest on the uninvested cash that users hold in their accounts and charges for its premium subscription service, Robinhood Gold, which provides enhanced features such as margin trading and access to professional research reports. Robinhood also benefits from its cash management services by earning interest on customer deposits. The company has partnerships with financial institutions to facilitate these services, contributing to its earnings.

Robinhood Markets Key Performance Indicators (KPIs)

Any

Monthly Active Users

Monthly Active Users
Tracks the number of users engaging with the platform each month, indicating user retention and overall platform popularity.

Chart InsightsRobinhood's Monthly Active Users (MAU) have shown volatility, with a notable decline from 2021 highs but a recent uptick in late 2024. Despite this fluctuation, the company's strong financial performance in 2024, with record revenue and market share gains, suggests strategic advancements are resonating with users. The introduction of innovative products like the Robinhood Legend platform and a new derivatives business may be driving renewed user engagement, positioning the company for continued growth in 2025 despite regulatory challenges.

Data provided by:

Main Street Data

Robinhood Markets Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: 28.63%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant growth in revenue and product offerings, strong performance in Robinhood Gold, and expansion into international markets. Although there were some concerns related to costs from acquisitions and credit provisions, the overall business performance and strategic direction were positive.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Revenue increased by 50% year-over-year, with trading volumes up double-digits year-over-year and a record quarter for options trading. Robinhood saw net deposits of $18 billion in the quarter.

Expansion of Product Offerings

Launched futures and prediction markets with significant growth, and introduced new products like Robinhood Strategies, Cortex, and Banking. Futures saw over 4.5 million contracts traded in April, more than all of Q1.

Strong Growth in Robinhood Gold

Gold subscribers nearly doubled year-over-year to 3.2 million, with new customers adopting Gold at a 33% rate. Gold cardholders doubled to 200,000, and retirement assets increased by 20% to $16 billion.

International Expansion and Acquisitions

Acquisition of TradePMR brought over $40 billion of platform assets. International customers increased to over 150,000, and the Bitstamp acquisition is on track to close mid-year.

Financial Performance and Share Repurchase

EPS more than doubled, with adjusted EBITDA margins expanding. Over $650 million deployed in share repurchase, with plan increased to $1.5 billion.

Negative Updates

Costs from TradePMR Acquisition

Anticipated approximately $85 million of costs from TradePMR in 2025, impacting financial outlook.

Challenges with Credit Loss Provisions

Increase in provision for credit losses due to brokerage-related losses, impacting financials.

Company Guidance

In the recent earnings call, Robinhood provided extensive guidance, showcasing strong growth and promising developments across several key areas. Revenue surged by 50% year-over-year, with net deposits reaching a record $18 billion in Q1 2025. Trading volumes increased significantly, with options trading hitting a record high. The company also highlighted the successful launch of new products like Robinhood Strategies, which already boasts over 40,000 customers and $100 million in assets. Robinhood Gold subscribers nearly doubled, reaching 3.3 million, indicating a 12% adoption rate, while international customers climbed to over 150,000. The acquisition of TradePMR added $40 billion in platform assets, and retirement assets rose to $16 billion, marking a 20% increase since the start of the year. Additionally, the company is progressing with its Bitstamp acquisition, expected to close mid-year, and is planning a crypto event in France. This robust product velocity is driving strong business results, with adjusted EBITDA margins expanding by 11 points, demonstrating the effectiveness of Robinhood's strategic initiatives.

Robinhood Markets Financial Statement Overview

Summary

Robinhood Markets demonstrates significant improvements in revenue and profitability, overcoming past financial challenges. The balance sheet is strengthened by eliminating debt, but cash flow management needs 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

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Neutral

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.26B	2.95B	1.89B	1.38B	1.84B	958.83M
	Gross Profit
2.18B	2.60B	1.71B	1.17B	1.35B	484.28M
	EBIT
1.27B	1.05B	-513.00M	-942.00M	-3.67B	13.78M
	EBITDA
1.35B	1.13B	-442.00M	-881.00M	-3.64B	23.72M
	Net Income Common Stockholders
1.59B	1.41B	-541.00M	-1.03B	-3.69B	2.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.50B	10.50B	4.83B	7.34B	8.13B	1.40B
	Total Assets
26.19B	26.19B	32.33B	23.34B	19.77B	10.99B
	Total Debt
7.46B	7.46B	3.55B	2.98B	5.64B	1.98B
	Net Debt
3.13B	3.13B	-1.29B	-3.36B	-617.55M	572.59M
	Total Liabilities
18.21B	18.21B	25.64B	16.38B	12.48B	8.86B
	Stockholders Equity
7.97B	7.97B	6.70B	6.96B	7.29B	2.12B
Cash Flow		Free Cash Flow
1.06B	-170.00M	1.16B	-909.00M	-968.43M	1.84B
	Operating Cash Flow
1.11B	-157.00M	1.18B	-852.00M	-884.77M	1.88B
	Investing Cash Flow
-92.00M	-148.00M	-582.00M	-60.00M	-237.88M	-32.33M
	Financing Cash Flow
-732.00M	-345.00M	-610.00M	-1.82B	5.20B	1.28B

Robinhood Markets Technical Analysis

Technical Analysis Sentiment

Positive

Last Price63.17

Price Trends

50DMA

48.37

Positive

100DMA

48.27

Positive

200DMA

38.11

Positive

Market Momentum

MACD

5.17

Negative

RSI

71.95

Negative

STOCH

76.20

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HOOD, the sentiment is Positive. The current price of 63.17 is above the 20-day moving average (MA) of 57.00, above the 50-day MA of 48.37, and above the 200-day MA of 38.11, indicating a bullish trend. The MACD of 5.17 indicates Negative momentum. The RSI at 71.95 is Negative, neither overbought nor oversold. The STOCH value of 76.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HOOD.

Robinhood Markets Risk Analysis

Robinhood Markets disclosed 65 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 3 New Risks

There are no guarantees that we will repurchase shares under the Repurchase Program or that the Repurchase Program will result in increased shareholder value. Q4, 2024

Risks Related to Regulation of PFOF Q4, 2024

Risks Related to our Business Relationships with Market Makers Q4, 2024

Robinhood Markets Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XYZ	76 Outperform	$38.23B	15.12	12.93%	―	4.60%	425.38%
HOOD	76 Outperform	$55.75B	36.05	21.43%	―	58.74%	1127.29%
TOST	76 Outperform	$24.73B	182.26	11.06%	―	26.72%	―
CPAY	75 Outperform	$22.86B	22.75	30.33%	―	6.68%	6.08%
NET	72 Outperform	$54.78B	―	-7.35%	―	27.79%	56.19%
Sector *	61 Neutral	$11.29B	10.17	-6.88%	2.97%	7.41%	-8.93%
AFRM	61 Neutral	$15.90B	―	-2.26%	―	42.54%	91.01%

* Technology Sector Average

Performance Comparison

HOOD

Robinhood Markets

66.02

45.55

222.52%

CPAY

Corpay Inc

333.23

70.07

26.63%

XYZ

Block

62.15

-3.93

-5.95%

NET

Cloudflare

161.76

87.89

118.98%

AFRM

Affirm Holdings

51.18

21.54

72.67%

TOST

Toast Inc

42.74

17.31

68.07%

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.

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.