In the third quarter, Robinhood saw a 36% increase in total net revenue compared to the previous year. Transaction-based revenue was the primary driver of this growth, soaring by 72% from the same quarter in the prior year. The platform has attracted 1.1 million new funded accounts, bringing the total to 24.3 million, surpassing the record set in the second quarter of 2021. The assets under custody have reached an all-time high of $152 billion, benefitting from the surge in asset prices, including a resurgence in cryptocurrencies.
A key focus for Robinhood this year has been its success in attracting more active traders, particularly larger clients, through its advanced features. Alongside increased trading activity, the company is also gaining traction with products like credit cards and its premium Gold subscription service. This has translated into earnings per share (EPS) of $0.17 for the quarter, a significant improvement from the $0.09 loss in the second quarter of 2023.
Optimism surrounds Robinhood’s future performance, with Wall Street estimates projecting a 45% annual revenue growth for this year and a doubling of EPS to $1.11 from 2023 levels. Looking ahead to 2025, earnings growth is expected to stabilize at a solid 12%.
Investors who believe in Robinhood’s long-term potential have compelling reasons to either buy or hold on to the stock. However, it’s essential to weigh the risks as well. The competitive landscape in the brokerage and fintech sectors is intense, with numerous alternatives available to consumers and active traders. Additionally, Robinhood’s forward price-to-earnings ratio (P/E) of 38 may appear relatively high compared to some traditional peers, like Interactive Brokers and Charles Schwab, which have a lower average forward P/E around 27.
For those who doubt Robinhood’s ability to stand out and capture significant market share, selling or avoiding the stock could be a consideration. Ultimately, the decision to invest in Robinhood should be made with a clear understanding of the risks and rewards, and how it fits into a diversified investment portfolio.
Stock Advisor, a trusted resource for investors, offers a comprehensive roadmap to financial success. With a focus on simplicity and effectiveness, Stock Advisor equips users with expert guidance on constructing a well-rounded investment portfolio, timely insights from seasoned analysts, and two carefully selected stock recommendations every month.
Since its inception in 2002, the Stock Advisor service has consistently outperformed the S&P 500 index, delivering returns that have surpassed four times the market average. This impressive track record underscores the value and expertise that Stock Advisor brings to the table, helping investors navigate the complex world of financial markets with confidence and agility.
As of December 9, 2024, Stock Advisor continues to showcase its prowess in identifying lucrative investment opportunities, with a portfolio that speaks volumes about its commitment to delivering results. By offering a curated selection of top-performing stocks, Stock Advisor empowers investors to make informed decisions that can potentially yield substantial returns over time.
It is important to note that Charles Schwab, a prominent financial institution, is a valued advertising partner of Motley Fool Money, further enhancing the credibility and reach of Stock Advisor’s recommendations. Additionally, it is worth mentioning that Dan Victor, a reputable individual in the financial realm, does not hold any positions in the stocks mentioned, highlighting the impartiality and transparency of the information provided.
In line with its commitment to providing valuable insights and recommendations, The Motley Fool, the parent company of Stock Advisor, endorses and recommends certain stocks such as Block, Coinbase Global, and Interactive Brokers Group. This endorsement is backed by thorough research and analysis, positioning these stocks as potentially lucrative opportunities for investors seeking to diversify their portfolios and maximize returns.
Furthermore, The Motley Fool advocates for prudent financial strategies by recommending options like short December 2024 $67.50 calls on Charles Schwab, showcasing a forward-thinking approach to managing investments and mitigating risks in a dynamic market environment. This strategic insight underscores The Motley Fool’s dedication to empowering investors with actionable recommendations that align with their long-term financial goals.
In the realm of financial journalism, transparency and disclosure are paramount. The Motley Fool adheres to a robust disclosure policy, ensuring that readers have access to accurate and unbiased information to make well-informed investment decisions. By upholding these standards, The Motley Fool sets a precedent for ethical reporting and responsible financial analysis, fostering trust and credibility within the investment community.
In conclusion, Stock Advisor stands as a beacon of excellence in the realm of investment advisory services, offering a wealth of resources and insights to help investors achieve their financial objectives with confidence and clarity. With a proven track record of success and a commitment to providing valuable recommendations, Stock Advisor continues to be a trusted ally for investors navigating the ever-evolving landscape of financial markets.
