For many hyped-up fast-growing businesses that hit the public markets during the frothy environment a couple of years ago, it has generally been a disappointing journey thus far. Take Robinhood (HOOD 0.99%), a company that was popular during the meme stock and crypto crazes. But since it started trading in July 2021, the stock is down 76%. This compares to a 14% drop for the tech-heavy Nasdaq Composite Index during that time. 

Are Robinhood shares a buy right now? Let's take a closer look at this fintech stock. 

Still posting growth in a difficult environment 

The uncertain macroeconomic environment has been a major headwind for most companies out there, but Robinhood keeps moving along. In the first three months of 2023, the business increased revenue 47% year over year to $441 million. This was also up 16% on a sequential basis. Key to this top-line figure was the fact that net interest revenue rose 278% versus the year-ago period thanks to higher securities lending activity and higher interest rates. 

Because Robinhood is a usage-based platform, what really matters for the business is how many customers it's attracting. As of March 31, the company counted 11.8 million monthly active users (MAUs). This figure was down 26% year over year, which is not a surprise given how retail investors have soured on equity markets. But what's encouraging is that MAUs were up about 400,000 from the end of 2022. With the S&P 500 up 9% in the first three months of this year, this makes sense. 

Robinhood now has 23.1 million total accounts. This number and the revenue total for the quarter both exceeded consensus analyst estimates. Nonetheless, the stock is down double digit percentages since the earnings report. 

Some unfavorable characteristics 

Robinhood might still be in full-on expansion mode, and that might be attractive for some investors, but there are a couple of reasons I'm staying away from the stock right now. 

For all the hype this business received early on, which I think was well-received, it's wild just how commoditized the main service has become. Robinhood deserves credit for ushering in the era of free stock trading, which led to huge disruption in the industry. However, today nearly all its rivals, like Charles Schwab and Interactive Brokers, for example, offer zero-commission trading. And they have sleek mobile apps, too. 

Robinhood has introduced numerous new product offerings, like IRAs and the Gold subscription (mainly providing a higher savings rate and some other features for a $5 monthly fee). What's more, the business is trying to come up with ways to drive higher engagement with the launch of 24-Hour Market. But at its core, this is still a discount brokerage, facilitating the buying and selling of financial securities in a user-friendly way. That's not as innovative or game-changing a service as it might have been before. 

Moreover, Robinhood hasn't been consistently profitable. Net losses in 2022 totaled $1 billion. And due to a one-time surge in stock-based compensation, the net loss was greater than $500 million in the first quarter. Management did tout the company's growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which had an all-time high margin of 26%. 

"And we aren't stopping here, we are committed to becoming profitable on a GAAP basis, and we're making good progress on that front," CFO Jason Warnick said on the Q1 2023 earnings call. We will see if, or when, this comes to fruition. 

To its credit, Robinhood does attract a younger customer with an average age of 32. This can benefit the business over the long term when these users stay with the platform as they get older and wealthier. That can lead to more deposit inflows and higher trading activity, which obviously could result in greater revenue for Robinhood.

It's also hard to argue with how addictive the app interface has proven to be. Whether you believe that to be a good or bad thing, it's clearly something that has worked in Robinhood's favor as it relates to customer behavior.

As of this writing, Robinhood shares trade at a price-to-sales multiple of 5.5, very low based on the stock's history. Still, I'm not a buyer today.