HOOD: The Evolution from ‘Retail Investor Hub’ to ‘All-Round Financial Giant’ Presents a Good Opportunity After Valuation Correction
In 2025, against the backdrop of a frenzy in AI stocks, one stock has also performed exceptionally well – Robinhood, the revolutionary player in the fintech sector.
Over the past year, HOOD’s stock price surged by more than 101%, achieving a doubling in value. Although it has pulled back by 12.04% year-to-date in early 2026, this presents a rare buying opportunity for investors. With a current market capitalization of approximately $89.5 billion, the company is entering a new phase of development: tripled third-quarter revenue, explosive growth in predictive market operations, Gold membership surpassing 2.8 million, and the potential historic opportunity to become the custodian institution for ‘Trump children’s accounts.’
More remarkably, Robinhood is no longer just a zero-commission trading app but a financial giant building a complete ecosystem—from trading, banking, credit cards, retirement accounts, prediction markets, mortgages, to an upcoming private market investment fund. This ‘Apple of finance’ strategy gives it far greater growth potential and user stickiness compared to traditional brokers.
Therefore, the current pullback might be the darkness before dawn, opening a rare entry point for long-term investors.
[Company Introduction]
Robinhood was founded in 2013 and is headquartered in Menlo Park, California, co-founded by CEO Vlad Tenev. The company’s mission is ‘to create a financial services platform for everyone, regardless of their wealth, income, or background.’ Through technological innovation and a zero-commission model, Robinhood has revolutionized the landscape of the U.S. securities brokerage industry, becoming the preferred platform for a new generation of investors.
Core Businesses
Brokerage Services: Offering a variety of investment products such as stocks, ETFs, options, cryptocurrencies, and gold, with innovative services including fractional shares trading, margin trading, 24-hour trading, futures contracts, and short-selling functionality.
Cryptocurrency Business: Acquired Bitstamp for $200 million in mid-2025, nearly doubling its cryptocurrency trading volume. In Q3, cryptocurrency revenue reached $268 million, surging over 300% year-over-year.
Robinhood Gold: A subscription service at $5 per month offering a 3.5% interest rate on cash deposits, margin trading, professional research, priority customer support, and other advanced features. Currently boasting over 2.8 million subscribers, with a net increase of 400,000 in Q3.
Banking Services: Launched the Robinhood Gold Card credit card (3% cashback on all purchases, no annual fee). The credit card now has 500,000 holders, with annual spending exceeding $8 billion. Additionally, partnered with Sage Home Loans to provide mortgage services at rates 0.75% below the national average.
Prediction Markets: A breakthrough business launched in 2024 that allows users to trade predictions on events such as elections, sports, and culture. In Q3, contract trading volume reached 2.3 billion, with October alone reaching 2.5 billion. It has already achieved an annualized revenue of $100 million and is expected to reach $300 million by year-end.
Retirement accounts: Offering both Traditional IRAs and Roth IRAs, with a 3% match for Gold members (1% for non-members). Assets under management in retirement accounts have reached $24.2 billion, representing a year-over-year increase of 2.5 times.
Competitive Advantages
1. Leading user experience: Featuring a clean and intuitive interface design, particularly favored by millennial and Gen Z investors. The average age of users is 10-15 years younger than that of traditional brokers.
2. Innovation-driven DNA: Pioneering features such as zero-commission trading, fractional shares, 24/7 trading, and prediction markets, continuously leading industry transformation.
3. Ecosystem development: Building the ‘Apple of the financial world’ by integrating trading, banking, credit cards, retirement, loans, and other services into one platform, significantly enhancing user stickiness.
4. Founder-led: CEO Vlad Tenev actively participates in product design and user engagement, directly listening to user feedback on social media to ensure the company maintains its innovative momentum.
[Financial Performance]
Robinhood Markets delivered a ‘textbook-level’ growth performance in the third quarter of 2025, with all core financial metrics hitting record highs since the company’s inception, strongly countering market skepticism about its ‘growth stagnation.’
1. Dual surge in revenue and net profit, leading growth within the industry.
Revenue doubled: Q3 net revenue reached $1.27 billion, representing a 100% year-over-year increase. This growth rate not only surpassed Wall Street expectations but also overshadowed the single-digit or low double-digit growth of peers like Charles Schwab and Interactive Brokers.
Net profit soared: Net income reached $556 million, surging 271% year over year. Earnings per share came in at $0.61, exceeding market expectations of $0.54. This marks Robinhood’s complete transition from a cash-burning phase into a period of scaled profitability.
2. All revenue engines firing, with cryptocurrency standing out as the star performer.
The company’s revenue structure exhibits a high degree of diversification and strong internal growth momentum, with transaction-based revenue increasing by 129% year-over-year to USD 730 million. The breakdown is as follows:
Cryptocurrency: Revenue reached USD 268 million, growing more than 300% year-over-year. This was primarily driven by the recovery in trading volumes of assets like Bitcoin and global business expansion following the acquisition of Bitstamp.
Options: Revenue amounted to USD 304 million, representing a 50% year-over-year increase. The options business remains the company’s ‘cash cow,’ contributing the largest share of transaction-based revenue.
Equities: Revenue totaled USD 86 million, marking a 132% year-over-year increase.
Additionally, net interest income remained robust, accounting for approximately 36% of total revenue. This demonstrates the company’s strong ability to monetize traffic through cash sweep programs and securities lending activities in a high-interest-rate environment.
3. Profitability: An EBITDA margin as high as 58%
The company’s operational leverage effect is accelerating, leading to a significant improvement in profit quality:
Adjusted EBITDA: Reached a record USD 742 million, nearly three times the figure from the same period last year (USD 268 million).
Record-high margin: The adjusted EBITDA margin reached 58%, an increase of 16 percentage points compared to the same period last year. This indicates that for every dollar of revenue generated, Robinhood converts $0.58 into core profit, showcasing profitability comparable to top-tier SaaS companies.
Cost control: While revenue doubled, the company’s share-based compensation expenses (SBC) as a proportion of revenue decreased to 6%. Additionally, the total shares outstanding remained stable over the past year, avoiding shareholder dilution.
4. User Ecosystem and Asset Accumulation
Assets Under Custody (AUC): As of the end of November, the total assets under custody on the platform reached $325 billion, representing a year-on-year increase of 67%.
Gold Membership Ecosystem: Subscription services have become a new growth driver. The number of Gold members surged to 2.2 million in Q3 (with a net increase of 400,000 in the quarter and 1.7 million year-on-year). The ARPU (Average Revenue Per User) and asset retention rate for Gold members are significantly higher than those of regular users, forming the “cornerstone” of the company’s performance.
Net Deposits: Net deposits remained robust in Q3, with $7.1 billion in net deposits recorded in November alone, reflecting an annualized growth rate of 25%. This demonstrates that user trust and fund stickiness on the platform have not been affected by market volatility.
[Strong Justification]
1. Ecosystem Strategy: Building the “Apple of the Financial World”
Robinhood is emulating Apple’s successful strategy by building a financial ecosystem that makes it difficult for users to leave. Once users open retirement accounts, use the Gold Card credit card, or apply for mortgages on Robinhood, the cost of switching platforms increases significantly, successfully transforming “trading users” into “asset-retaining users.”
2. Prediction Markets: Opening Up a New Growth Curve
The prediction markets business has emerged as a dark horse, with 2.3 billion contracts traded in Q3 and 2.5 billion contracts traded in October alone. It has already generated $100 million in annualized revenue and is expected to reach $300 million by the end of the year. CEO Vlad Tenev stated, “Some believe this could become one of the largest asset classes.” Prediction markets not only bring in new revenue but also significantly boost user engagement and platform activity.
3. Doubling Cryptocurrency Market Share: Bitstamp Acquisition Shows Strength
Following the acquisition of Bitstamp for $200 million in mid-2025, cryptocurrency trading volumes nearly doubled. In Q3, Robinhood’s cryptocurrency revenue reached $268 million, marking a year-on-year increase of over 300%, with market share rising from approximately 1% to 2%. As regulatory conditions improve and the market matures, Robinhood’s first-mover advantage in this field is expected to yield significant long-term returns.
4. Continuous Product Innovation: Maintaining a Competitive Edge
The upcoming short-selling feature, the Robinhood Ventures private equity fund pending SEC approval, the planned social features set for launch in 2026, and the already launched futures trading are all reinforcing Robinhood’s “moat.” Each new feature attracts new users while increasing engagement among existing ones.
5. Outstanding Profitability: Adjusted EBITDA Margin of 56%
The adjusted EBITDA margin reached 56% in Q3, surpassing traditional brokerages and most tech companies. The proportion of stock-based compensation to revenue decreased from 12% to 6%, reflecting strong cost control. High profitability provides the company with significant financial flexibility for future development.
6. Significant Room for Market Share Growth
Robinhood holds approximately 1% market share in equities, 7% in options, and 2% in cryptocurrencies, leaving ample room for growth. Over the past year, the company has doubled its market share across all asset classes. This growth trend is expected to continue as Millennials and Gen Z accumulate wealth.
7. Potential Custodian for “Trump Accounts”: Policy Dividend
According to a Bloomberg report on January 30, the U.S. Treasury is considering selecting Robinhood as one of the custodians for the “Trump Accounts” program. This initiative will provide a $1,000 initial investment for children born between 2025 and 2028. If selected, Robinhood would gain millions of new clients, tens of billions in new assets under management, long-term customer relationships, and further brand enhancement.
[Valuation Analysis]
Robinhood’s current valuation is within a relatively reasonable range, especially considering its 74% revenue growth rate and 56% adjusted EBITDA margin.
Absolute Price Position
The current stock price is approximately $99.48, with a market capitalization of about $89.5 billion.
This represents a decline of approximately 34% from the high of $150 in 2025.
The stock has risen 101.38% over the past year but has fallen 12.04% since the beginning of 2026.
Valuation Metrics
Price-to-Earnings Ratio (P/E, Non-GAAP TTM): 49.01x
Price-to-Sales Ratio (P/S, TTM): Approximately 7.7x
Revenue Growth Rate (YoY): 74.58%
PEG Ratio: Approximately 0.66 (
Comparison with Peers
Although Robinhood’s P/E ratio of 49.01x appears higher than Charles Schwab’s (21.16x) and Interactive Brokers’ (34.28x), its revenue growth rate of 74.58% is more than three times that of traditional brokers. Considering that Robinhood is building a diversified financial ecosystem (rather than just brokerage services) and targeting the younger generation with rapidly growing wealth, this premium valuation is justified.
[Institutional Ratings]
Wall Street analysts maintain a positive outlook on Robinhood:
Argus: Initiated coverage on January 9, 2026, with a ‘Buy’ rating and a target price of $145.
Needham: Reiterated ‘Buy’ rating with a target price of $135 (36% upside potential).
Truist: Initiated coverage with a ‘Buy’ rating and a target price of $155 (56% upside potential).
Citizens JMP: Reiterated ‘Outperform’ rating with a target price of $170.
The average analyst target price is approximately $145, representing an upside potential of about 46% from the current price. The highest target price of $170 implies a 71% upside potential.
Viewpoint of Brant, Chief Analyst at Chinese Investment Network
Since its establishment, Robinhood has consistently capitalized on every emerging trend, transforming from an unknown startup into a financial giant today. The stock’s significant rise over the past two years reflects market recognition of the company’s transformation. In the short term, the stock’s valuation does appear relatively high, and there is a technical need for adjustment. However, from a medium- to long-term perspective, the company’s strong and steady growth will likely help deliver substantial returns to investors over time.
The recent sharp volatility in the commodities market has not significantly impacted the stock market. In terms of trends, traditional AI infrastructure stocks represented by Oracle continue to be in an adjustment phase. However, AI powerhouse Alphabet and memory chip stocks have emerged as new leaders in the artificial intelligence sector. Going forward, the market may still resist further declines, but new areas of interest and direction are unlikely to be absent and should be carefully assessed. Additionally, we believe that the aftershocks of the commodities turmoil may persist, and investors should exercise caution.
