Buy Or Sell Robinhood Stock?

Robinhood Markets (NASDAQ:HOOD) stock surged by close to 14% over the past month and remains up by almost 170% year-to-date in 2025. So, what’s driving the rally? Robinhood is seeing strong earnings momentum, while growing its customer base and making big moves in the hot cryptocurrency market.

Image by Sergei Tokmakov, Esq. from Pixabay

Strong Q2 Earnings

The company just reported a better-than-expected set of results for Q2 2025 last week. Revenues rose 45% year-over-year to $989 million, while adjusted earnings roughly doubled to $0.42 per share. Transaction-based revenues remain Robinhood’s biggest sales driver, and growth here was strong at 65% year-over-year. On the user side, funded customers rose by 2.3 million to 26.5 million. Meanwhile, total platform assets nearly doubled, rising 99% from a year earlier to $279 billion, driven by strong net deposits, acquired assets, and higher equity and cryptocurrency valuations. This surge is important, as a larger asset base increases Robinhood’s ability to generate revenue through trading activity, interest income, and advisory services.

Crypto Push

Robinhood has also been pushing deeper into crypto assets in recent quarters. Cryptocurrency revenue rose 98% to $160 million, narrowly missing the sixth consecutive quarter of triple-digit growth, and the company has been expanding in this space. It closed its acquisition of global cryptocurrency exchange operator Bitstamp, which gives it over 50 active licenses and registrations around the world, while also doubling down on the enterprise space, boosting its lending and staking infrastructure, and offering more specialized products built for hedge funds, fintechs, and registered investment advisors. The markets have also been increasingly focused on the crypto narrative in recent months, fueled by a more favorable regulatory outlook and growing support from the Trump administration, and this has helped the stock.

Building Loyalty as Users Grow Wealthier

Robinhood’s user base is heavily dominated by millennials and younger investors. There is a massive wealth transfer expected to move from older generations to millennials and Gen Z over the next two decades, running into tens of trillions of dollars. By acquiring these users early, Robinhood positions itself to benefit as their assets and investment needs grow over time. As millennials age, their financial needs will also diversify over time. Considering this, Robinhood has begun offering products beyond just trading – such as retirement accounts, high-yield cash balances, and wealth management tools – to retain users as their financial sophistication increases.

So is HOOD attractive at current levels of around $107 per share? Robinhood stock has momentum on its side, with strong recent growth and margins, although there are some risks investors should be aware of.  However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

How Does Robinhood Markets’ Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, HOOD stock looks very expensive compared to the broader market.

• Robinhood Markets has a price-to-sales (P/S) ratio of 28.9 vs. a figure of 3.0 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 89.1 compared to 20.6 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 59.2 vs. the benchmark’s 22.8

How Have Robinhood Markets’ Revenues Grown Over Recent Years?

Robinhood Markets’ Revenues have grown considerably over recent years.

• Robinhood Markets has seen its top line grow at an average rate of 30.0% over the last 3 years (vs. increase of 5.2% for S&P 500)
• Its revenues have grown 59.6% from $2.0 Bil to $3.3 Bil in the last 12 months (vs. growth of 4.4% for S&P 500)
• Also, its quarterly revenues grew 50.0% to $927 Mil in the most recent quarter from $618 Mil a year ago (vs. 4.1% improvement for S&P 500)

How Profitable Is Robinhood Markets?

Robinhood Markets’ profit margins are considerably higher than most companies in the Trefis coverage universe.

• Robinhood Markets’ Operating Income over the last four quarters was $1.3 Bil, which represents a considerably high Operating Margin of 39.0% (vs. 18.4% for S&P 500)
• For the last four-quarter period, Robinhood Markets’ Net Income was $1.6 Bil – indicating a considerably high Net Income Margin of 48.8% (vs. 12.0% for S&P 500)

How Resilient Is HOOD Stock During A Downturn?

HOOD stock has fared much worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• HOOD stock fell 90.2% from a high of $70.39 on 4 August 2021 to $6.89 on 16 June 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 3 June 2025
• Since then, the stock has increased to a high of $109.74 on 20 July 2025 and currently trades at around $105

Putting All The Pieces Together: What It Means For HOOD Stock

Despite its high valuation, Robinhood’s strong growth, solid margins and improving profitability make the stock attractive.

While HOOD stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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