Investment platform Robinhood Markets (HOOD -1.89%) stock has exploded over the past year, up nearly 370%. It's enjoying strong growth as well as investor confidence in its innovative investing options, and the stock is now well past its previous highs as it soars into the stratosphere.
Let's see if it can maintain this growth over the next five years and what might be happening at Robinhood.
The new Robinhood
Robinhood is a clever name for a company aiming to help the everyman get richer. It rose to fame with its free trades that attract the novice investor, and some infamy as it became the platform of choice for meme investors who generated some short-squeezes a few years ago.
It has moved past that to become a real player in fintech. Although its core product is its trading platform, it offers a large suite of financial services through its financial ecosystem, including bank accounts and a credit card. Its offerings are innovative, delivering a truly unique experience in its field, and its value-driven business approach appeals to savvy investors. Robinhood is adding new customers at a rapid pace, and it's monetizing them with fee-based products and a premium membership program.
Image source: Getty Images.
It reported stellar results in the 2025 first quarter. Revenue increased 50% year over year, and although much of it was driven by a 100% increase in cryptocurrency revenue, it was also driven by higher sales of other trading products like equities, which were up 44%, and options, which increased 56%. There were many other highlights, including a 44% increase in deposits annualized over the past 12 months and a 14% increase in net interest revenue. Net income was up 114% from last year.
Funded customers increased 1.9 million, or 8%, to 25.8 million, and average revenue per user increased 39% to $145. It added 550,000 gold members, or 1.5 million year over year to nearly double last year's figure. Gold members pay $5 a month or $50 annually and get perks like 3% matching in individual retirement accounts (IRA) and 4% interest on uninvested funds.
Opportunities, risks, and valuation
The company is constantly releasing new products and upgrading its platform. It recently launched a slew of new services including Robinhood Strategies and Robinhood Banking, and it's rolling out more services internationally. It has more plans for the remainder of the year, such as expanding the crypto platform and continuing the banking rollout. It recently announced a new tokenization product for European customers that gives them the opportunity to buy tokens on a blockchain that follows certain U.S. stocks.
Robinhood is taking a fresh and even visionary approach to finance that resonates with a certain demographic, and that bold vision should lead it into many growth areas over the next five years.
However, there are several risks here. The first is the focus on cryptocurrency. That focus is somewhat responsible for Robinhood's meteoric rise over the past year, but it could equally bring the company down to earth if trends change. Investing in Robinhood stock is a big thumbs-up for cryptocurrency. If you have a lot of confidence in crypto trading, Robinhood could be an excellent way to get exposure while investing in a company that has tangible assets. But it comes with volatility.
Robinhood stock is also quite expensive, trading at a P/E ratio of 62 and a price-to-sales ratio of 31. Over the next five years, it could be challenging to keep up growth at that valuation.
If you have a healthy appetite for risk and are a fan of cryptocurrency, you may be interested in taking a position in Robinhood, which could be valued a lot higher five years from now. Investors with a low risk tolerance, however, should sit this one out.
