Why we love Robinhood ($HOOD)

Welcome back to our first edition of our Tuesday morning newsletter, featuring our favorite stocks.

Today we are going to be talking about a stock that we think is a great long term investment, $HOOD ( ▼ 0.42% ) . This stock just hit an all time high and we think that it can go even higher! Enjoy our analysis and stick around until the bottom where we give our thesis and conclusion.

Summary

Robinhood Markets, Inc. ($HOOD) has been a polarizing name in the financial world since its IPO in 2021. From its disruptive, commission-free trading model to its role in the meme stock frenzy, Robinhood has captured the attention of retail investors and Wall Street alike. As of June 2025, $HOOD is trading around $66.15, with a market capitalization of approximately $57.5 billion. Some analysts and investors are eyeing a $100 price target, implying a roughly 50% upside. But what would it take for Robinhood to achieve this? Let’s break down 5 keys to have $HOOD ( ▼ 0.42% ) hit $100 and other risks.

1. Strong Financial Performance and Growth Momentum

Robinhood’s recent financials demonstrate robust growth, fueling optimism about its future. In Q4 2024, the company reported its first $1 billion revenue quarter, a significant milestone driven by a 487% sequential quarter-over-quarter increase in crypto revenues and 733% year-over-year growth. Overall, the company posted 50% year-over-year revenue growth, with nine business lines generating over $100 million in annualized recurring revenue (ARR). Net deposits grew at a 37% annual rate, reflecting strong user engagement and capital inflows.

Earnings per share (EPS) have also exceeded expectations. In Q1 2025, Robinhood reported an EPS of $0.38, beating consensus estimates by 15%, though it fell 12% below some bullish projections. Analysts forecast next quarter’s EPS at $0.29, with a range of $0.23 to $0.33. If Robinhood continues to outperform on earnings and maintains its adjusted EBITDA margin growth (up 11 percentage points year-over-year to 51% in Q1 2025), its valuation could expand significantly.

To reach a $100 stock price, Robinhood would need a market cap of approximately $88 billion (assuming 879 million shares outstanding). Based on a forward P/E ratio of 38x (aligned with Piper Sandler’s $70 price target based on 2026 EPS estimates), Robinhood would need to generate an EPS of around $2.63 by 2026 or 2027. Given its current trajectory and analyst expectations of 105% above-consensus crypto revenues for 2025, this is ambitious but plausible if growth accelerates.

2. Strategic Expansion and Product Diversification

Robinhood is no longer just a commission-free stock trading app; it’s evolving into a comprehensive financial ecosystem. The company has aggressively expanded its portfolio, which now include:

• Crypto Trading and Bitstamp Acquisition: Robinhood’s acquisition of Bitstamp has bolstered its crypto operations, granting over 50 global crypto licenses, an institutional client base, and infrastructure for lending, staking, and crypto-as-a-service. With Bitcoin prices nearing record highs, crypto trading volumes have surged, benefiting Robinhood’s bottom line.

• Robinhood Legend and Global Expansion: The launch of Robinhood Legend, a desktop trading platform, and its expansion into the U.K. target more sophisticated retail investors and international markets. This diversifies revenue streams beyond the U.S.

• New Financial Products: Robinhood now offers credit cards, cash cards, spending accounts, wallets, fractional trading, margin investing, retirement programs, event contracts, and futures trading. Prediction markets and a potential $41 billion RIA (Registered Investment Advisor) acquisition signal further ambitions.

• Educational Tools: Features like Snacks, Learn, In-App Education, and Crypto Learn and Earn enhance user engagement, attracting younger investors and fostering long-term loyalty.

3. Riding the Crypto and Retail Trading Wave

Robinhood’s fortunes are closely tied to market trends, particularly in cryptocurrency and retail trading. The recent rise in Bitcoin prices has boosted crypto trading firms, with Robinhood shares gaining from this momentum. Analysts at Piper Sandler view $HOOD as the “most attractive risk/reward way to play the crypto bull run,” citing its exposure to crypto revenues, which are expected to grow non-linearly if Bitcoin breaks past its $109,000 high.

Retail trading activity also remains strong. Robinhood customers have been active in tech names like Amazon, Apple, and Nvidia, especially during market dips. Options trading hit a new all-time high in April 2025, and equities trading reached its highest level since Q1 2021. These trends reflect robust user activity, which drives transaction-based revenues.

4. Technical Analysis and Market Sentiment

From a technical perspective, $HOOD exhibits strong bullish signals. The stock is in a “strong rising trend,” with a Barchart Technical Opinion rating of 100% Buy and a “Strongest” short-term outlook. It recently broke out from an ascending triangle pattern, surpassing a key resistance level at $67, and is consolidating around $66.15. Analysts predict a 58.7% upside over the next three months, with a 90% probability of reaching $77.13 to $106.65 by August 2025.

The stock’s volatility (14% weekly) and beta of 3.08 indicate high risk but also high reward potential. Increased trading volume, up 15 million shares on the last trading day, and a short interest ratio of 0.6 days to cover suggest limited downward pressure from shorts.

Analyst price targets vary widely, from $32 to $105, with an average of $61.95, implying a slight downside from current levels. However, bullish targets, such as Bernstein’s $105, reflect optimism about Robinhood’s crypto exposure and earnings growth. Validea’s Quantitative Momentum Investor model, based on Wesley Gray’s strategy, gives $HOOD a 100% rating, highlighting its strong intermediate-term relative performance.

5. Competitive Positioning and User Demographics

Robinhood’s user-friendly app and commission-free model have made it the go-to platform for younger, mobile-first investors. Its focus on accessibility and education appeals to Gen Z and Millennials, who are driving the retail trading boom. Unlike traditional brokerages like Charles Schwab, Robinhood prioritizes simplicity and engagement, giving it a competitive edge in capturing market share.

The company’s ability to thrive in both bull and bear markets is a unique strength. As one Reddit user noted, “How can it be bad to bet on the casino itself?” Robinhood profits from trading volumes regardless of market direction, making it a resilient investment.

Risks and Challenges

While the bull case is compelling, several risks could derail $HOOD’s path to $100:

• Market Volatility: A crypto market crash or a broader economic downturn could reduce trading volumes, hurting revenues. Tariff-related fears previously caused a 56% pullback from $67 to $29.

• Regulatory Scrutiny: Robinhood has faced lawsuits and investigations, including shareholder alerts in 2022 and 2023. Regulatory changes could impose fines or restrict operations.

• Competition: Rivals like Interactive Brokers, eToro, and Coinbase are vying for market share. If Robinhood fails to innovate, it could lose its edge.

• Valuation Concerns: The stock’s high forward P/E ratio reflects growth expectations, but any earnings miss could trigger a sell-off. Transactional revenues are currently 3% below consensus, signaling potential weakness.

• Trust Issues: Past controversies, such as trading restrictions during the 2021 meme stock saga, have damaged Robinhood’s reputation. A black swan event could erode user trust further.

The Path to $100

For $HOOD to reach $100, several catalysts must align:

1. Sustained Crypto Rally: Continued strength in Bitcoin and other cryptocurrencies would drive trading revenues, potentially pushing EPS toward $2.63 by 2026.

2. Successful Product Rollouts: The Bitstamp integration, Robinhood Legend, and new financial products must deliver on revenue expectations.

3. Global Expansion: Penetration into markets like the U.K. and beyond could significantly boost user growth and diversify revenues.

4. Macro Stability: A favorable economic environment with moderate volatility would sustain retail trading activity.

5. Earnings Beats: Consistent EPS outperformance and upward revisions to analyst price targets could fuel bullish sentiment.

Analysts’ highest price target of $105 suggests $100 is within reach, particularly if Robinhood capitalizes on its crypto and retail trading momentum. However, the stock’s volatility and regulatory risks require investors to tread carefully.

Our Thesis

In considering the future of brokerage applications and companies aiming to attract the next generation of investors, Robinhood is emerging as a frontrunner. A significant number of young individuals globally have begun investing in cryptocurrencies, stocks, options, and even engaging in "sports betting" on prediction markets related to various events beyond the stock market. As the "wealthiest generation" of baby boomers eventually passes, their wealth will be inherited by individuals whose average age aligns with that of a typical Robinhood investor, currently 37 years old. Robinhood aspires to establish itself as the primary financial institution for the next generation, encompassing all aspects of financial management. Presently, it is outperforming competitors such as Webull and has surpassed SOFI in the investment sector. Additionally, Robinhood is offering interest rates that exceed those of a SOFI high-yield savings account for funds maintained in a Robinhood available balance.

We do not see any competition for Robinhood in the same space that they currently occupy and no brokerage company has made taking control of your money so easy. We have consistently been dollar cost averaging into $HOOD ( ▼ 0.42% ) for a couple months now and think this company is set up for long term success. We posted about Robinhood on X on 5/20 when they were sitting at $64 dollars a share and already at $78! While we see the current price of $78 being on the higher side, we will be breaking the consistent dollar cost averaging and make a large investment in if the stock drops below $70 in the near future.

Conclusion

Robinhood Markets ($HOOD) has transformed from a scrappy startup to a fintech powerhouse, with a diversified product suite, strong financials, and a loyal user base. Its exposure to the crypto bull run, innovative culture, and technical momentum make a compelling case for reaching $100, potentially within 12-18 months if growth catalysts materialize. However, investors must weigh the risks of market volatility, competition, and regulatory challenges.

For those bullish on the future of retail investing and cryptocurrencies, $HOOD offers a high-risk, high-reward opportunity. Whether it hits $100 will depend on its ability to execute on its ambitious vision and navigate a complex market landscape. Keep an eye on upcoming earnings (August 6, 2025) and crypto market trends for clues about $HOOD’s next move.

Our weekly recap will be out on Friday about how the market preformed this week and what we took away.

Disclaimer: Investing in stocks involves risks, and past performance is not indicative of future results. The content provided in this newsletter is for informational and educational purposes only and should not be construed as financial, investment, tax, or legal advice. While we strive for accuracy, we cannot guarantee that all information is up to date or applicable to your individual situation. Always consult with a qualified professional before making financial decisions. We are not liable for any actions taken based on this content. All opinions are our own.