How Robinhood Stock Can 2x

Could Robinhood Markets (NASDAQ:HOOD) stock rise from levels of $115 currently to $230 in the coming years?  We think it’s a possibility. Consider this, the stock was trading at levels of about $55 in mid-May 2025 and has already rallied by close to 2x in less than 3 months. Looking at the valuations, HOOD stock trades at about 60x adjusted trailing earnings. While this might appear expensive at first glance, the company has demonstrated strong earnings momentum, a fast expanding customer base, while making big moves in the hot cryptocurrency market. In the scenario below, we use HOOD’s revenues, margins, and valuation multiples to demonstrate a potential path to a $200-plus stock price in the near future.

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Big Revenue Potential

HOOD’s revenues have risen considerably from $280 million in 2019 to about $2.9 billion in 2024, an annual growth of almost 60%. Growth over the last three years averaged about 30%. It looks like the momentum can hold up. Consensus projects a close to 35% revenue growth for 2025 to about $4 billion. However, there is a real opportunity for HOOD to maintain this average annual rate of close to 35% for the next few years, led by continued customer growth for the company, significant potential in the crypto business, and wealth management solutions.

Considering this, revenues could move from an estimated $4 billion in FY’25 to around $7.3 billion by FY’27, or an over 82% increase.  Here’s a closer look at what could drive this growth. Separately, if you are looking for potential gains with reduced volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having surpassed the performance of the S&P 500 and produced returns of over 91% since its inception.

Expanding and Monetizing a Larger Customer Base: Robinhood has proven to be agile and innovative and has a good understanding of young retail investors, and this has led to strong user growth. Funded accounts jumped by 2.3 million last quarter to 26.5 million, while platform assets nearly doubled year-over-year to $279 billion. This growing asset base is a revenue engine, enabling more trading activity, higher interest income on idle cash, and greater potential for advisory fees.

Deepening Push Into Crypto: Crypto revenues surged 98% last quarter to $160 million, just shy of a sixth straight quarter of triple-digit growth. The company has also been expanding its operations via acquisitions. It finalized its purchase of global cryptocurrency exchange operator Bitstamp, which provides it with over 50 active licenses and registrations internationally, while also strengthening its enterprise efforts by enhancing its lending and staking infrastructure and offering more specialized products tailored for hedge funds, fintechs, and registered investment advisors. A friendlier regulatory climate and growing political support, including from the Trump administration, have further fueled investor enthusiasm for the stock.

Catching Them Young: 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 rise over time. As millennials age, their financial needs will also diversify as time goes by. 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 stature increases. While this may be a longer-term theme for the stock, it is a highly significant one.

Operating Leverage Will Drive Margins

Combine this robust revenue growth with the fact that HOOD’s adjusted net margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) are on an improving trajectory – they grew from negative levels in FY’21 to about 35% in FY’24. Growth has been led by strong gains in high-margin revenue channels, such as payment for order flow and margin interest. Strong growth in transaction volumes, particularly crypto, have also been helping the company.

Robinhood’s model also has considerable operational leverage since costs do not have to rise  proportionally with revenues. Margins could potentially trend still higher to levels of about 40% considering these trends. Now, combining 40% adjusted net margins, with about $7.3 billion in revenue, would translate into earnings of about $2.9 billion. That’s a roughly 2.9x increase from levels seen in 2024.

Strong Results Mean A Smaller Contraction In P/E Multiples

Now, if earnings grow 2.9x, the price-to-earnings multiple will shrink by 2.9x, from levels of about 21x, assuming the stock price stays the same. But that’s exactly what HOOD investors are betting will not happen. If earnings expand 2.9x over the next few years, instead of the P/E shrinking from a figure around 60x now to about 21x, a scenario where the PE metric stays at about 40x looks more likely, as strong growth and improving margins give investors more confidence about HOOD’s future.

This would make the growth of HOOD stock to levels of close to $230 within the next few years a real possibility. So what about the time horizon for this high-return scenario? While our example above illustrates a roughly two-year time frame, in practice, it won’t make much difference whether it takes two years or three, as long as HOOD is on this revenue expansion trajectory, with margins holding up, the stock price could respond similarly.

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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