Robinhood Markets Inc. became familiar to many, at least to some extent, during the boom years of the pandemic. However, it is a financial technology company founded already in 2013, focusing on cost-effective trading. The company was one of the first platforms to offer commission-free trading, thus widely influencing pricing models in the investment sector.
Through Robinhood’s platform, you can buy stocks, ETFs, options, cryptos, as well as fractional shares, and the services include various savings and cash accounts.
The best way to get to know the company is by reading the company’s own presentations:
Robinhood’s October report highlights that the number of customers, assets under management (AUM), and deposits have risen significantly from the previous year; in addition, cash and margin balances have grown considerably.
Equity, option, and crypto volumes show strong year-over-year growth. All of the company’s key metrics are on an upward trend on both a monthly and annual basis.
JMP Securities is raising the price target due to the strong October performance and positive outlook, particularly driven by the prospects in the crypto sector.
Robinhood:
Robinhood Markets made its name with a free stock-trading app. Now, it’s getting into wealth management. Robinhood has struck a deal to buy TradePMR, a financial company that provides custody, technology, and portfolio management tools to registered investment advisory firms, known as RIAs.
The deal gives Robinhood a toehold in one of the fastest-growing segments of the multi-trillion dollar wealth management industry — and advances Robinhood’s goal of diversifying its business. TradePMR serves 350 firms and has more than $40 billion in assets under advisement, according to the company.
Robinhood says the acquisition is expected to cost approximately $300 million, consisting of a mix of cash and stock. The deal, announced Tuesday, is expected to close in the first half of 2025 and is subject to closing conditions and regulatory approvals.
The number of customers grew by over 400,000, and assets under management rose to over $190 billion, which means over 15 percent growth from the previous month and over 100 percent increase compared to 2023. This growth is primarily due to an increase in customer deposits, which grew by over $5 billion in November. Trading volume increased significantly, especially in cryptocurrencies, whose trading volume grew by over 600 percent.
Then, of course, the company’s financial indicators, such as margins and cash flows, improved significantly.
A couple of takeaways from Vlad from the Investor Day:
“I’m happy to announce that the next market we are planning to expand to is Singapore.”
This was IMO big: “We’ve quietly become a big player in crypto. We are already doing half the volume of trading that Coinbase does while only being in the USA and having less than 10% of the coins they list.”
“We believe traditional financial systems and crypto will emerge. You should expect stocks and other assets will be eventually tokenized and available on chain. We’ll be having a crypto event in 2025 to share more of our initiatives.”
Generational wealth transfer - Don’t play the casino. Be the casino.
The tweet below states, among other things, that Robinhood is growing rapidly: in Q3 the company achieved 36 percent annual growth, assets under management rose by 76 percent, and user accounts exceeded the 24 million mark.
The growth is based on strong user loyalty and ecosystem expansion, including cryptocurrencies, credit cards, and wealth management. An intuitive interface and innovative services differentiate it from competitors and create sustainable growth, according to the tweeter.
The tweet below mentions that Robinhood has transformed the brokerage industry with its innovations, such as commission-free trading.
The tweet also states that 2024 has been a pivotal year for the company, as it has expanded its services to include “retirement accounts”, crypto wallets, and credit cards. International growth and a young user base strengthen its position as a global fintech leader.
According to the tweet, RobinHood is growing strongly; Q4 revenue is predicted to rise over 80 percent and profit could be the best in the company’s history.
The launch of futures trading and the acquisition of Bitstamp expand revenue streams. Crypto volumes naturally benefit from Bitcoin’s rise, and “gold enthusiasts” significantly increased.
A debt-free balance sheet and share buybacks support long-term potential.
Morgan Stanley raised Robinhood’s price target to $55 and added it to its 2025 favorites, citing several growth opportunities.
Robinhood controls only about 0.3 percent of the United States’ $70 trillion in investment assets, but it is expected to grow by over 20 percent annually by expanding its offerings, such as cryptocurrencies, banking services, and international markets. The amount of customer assets is predicted to grow significantly per account.
Well said, the importance of communication! Here Robinhood and Palantir also stand out… Transparency, coming forward, answering questions… The only communication should not be a quarterly report.
Robinhood performed well at the end of the year: revenue and earnings grew tremendously, especially driven by crypto trading.
Even per-user revenues rose sharply, and new deposits grew strongly in addition. The company invested in products, such as a platform for active traders and a Gold card. Robinhood aims to expand its operations in Europe. Costs also apparently remained under control.
Here’s a tweet discussing Robinhood’s Gold card and how it would serve as a sustainable and strong revenue driver. I hadn’t previously realized its impact, even though I had read about it in the company’s materials before.
I’m not entirely sure if I understood correctly, but Robinhood has launched some kind of prediction markets where users can bet on political, economic, and sports events. CEO Vlad Tenev believes the markets will improve as participation grows.
Prediction markets offer a new way to interpret information and predict event outcomes.
(@Kale-possu, interested? )
At the upcoming Gold Summit on Wednesday, HOOD will likely announce the addition of the Investment Advisory sector to its business. This would be a significant addition to its offerings, as it is an $85 trillion global market expected to grow to $146.8 trillion by 2032. Robinhood currently has a growing, relatively young customer base of approximately 26 million users in the USA, to whom the service would be offered in the future.
I emphasize again that this is partly my own and JaguarAnalytics’ (username on X) assessment of the upcoming announcement, and it is based on, among other things, Morgan Stanley analyst Michael Cyprys’ assessment and the article below, stating that HOOD will present new growth opportunities at the event, especially in investment advisory solutions, including managed accounts and AI-powered RIA (Registered Investment Advisor) software. The market is unlikely to be pricing in the significant impact this announcement will have on HOOD’s growth story.
Last year, HOOD acquired the TradePMR portfolio management platform, which serves approximately 400 registered investment advisors with $40 billion in assets under management. This strategic collaboration accelerates HOOD’s entry into the rapidly growing investment advisory market (CAGR 5.5%). My own assumption is that, with an excellent app, a dedicated and optimally aged, and growing customer base, HOOD has the potential to grow significantly faster than the market in this sector in the coming years.
HOOD has already risen +37% from its March 10th low (after initially falling rapidly -46% from its peak), so it’s possible that this rumor/news/speculation has already been priced into the stock, especially today, as the stock rose +9%. HOOD has been one of the most interesting (trading) targets during this downturn and is currently clearly one of my largest US positions, along with AMD and UBER.
