Robinhood's (HOOD 1.78%) stock nearly tripled over the past 12 months. The online brokerage dazzled investors with its robust revenue growth, rising margins, and soaring profits.
Does Robinhood's stock still have more room to run before its next earnings report in February? Let's review its business model, growth rates, and valuations to determine the answer.
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Understanding Robinhood's business model
Robinhood, which was founded in 2013, disrupted traditional online brokerages with its commission-free trades and gamified trading app. It subsidizes its free trades by bundling together its smaller orders and selling them to high-frequency trading (HFT) firms.
Those "payment for order flow" (PFOF) payments -- along with its crypto trading revenues (from rebates and spreads), net interest income (from uninvested cash, margin loans, and securities lending), and subscription revenues from its premium Gold tier -- generate most of its revenue.
Robinhood attracted a large number of new investors during the trading boom in meme stocks, growth stocks, cryptocurrencies, and speculative options from 2020 to 2021. That bullish stampede was driven by stimulus checks, social media buzz, and a fear of missing out (FOMO).
Its growth slowed down in 2022 as it lapped that growth spurt, and rising interest rates drove investors toward more conservative investments. However, it recovered over the following three years as interest rates cooled off, it introduced new features, and expanded its ecosystem.
NASDAQ: HOOD
Key Data Points
From 2020 to 2024, Robinhood's annual revenue more than tripled, from $959 million to $2.95 billion, as its number of funded customers more than doubled, from 12.5 million to 25.2 million. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turned positive again in 2023 (after a red 2022) and more than doubled in 2024. On a generally accepted accounting principles (GAAP) basis, it turned profitable in 2024.
What happened to Robinhood over the past year?
In the first nine months of 2025, Robinhood's revenue rose 65% year over year to $3.19 billion, its adjusted EBITDA surged 116% to $1.76 billion, and its GAAP net income jumped more than 15 times to $169 million. That growth was partly driven by its acquisition of TradePMR last November, but its business continues to expand organically.
By the end of the third quarter of 2025, Robinhood's total number of funded customers increased 10% year over year to 26.8 million. Its number of Gold subscribers -- who get access to $1,000 of interest-free margin, lower margin rates, higher interest rates on uninvested cash, bonuses on IRA contributions, and other perks -- surged 77% year over year to 3.9 million.
For the full year, analysts expect Robinhood's revenue and adjusted EBITDA to rise 53% and 77%, respectively. From 2025 to 2027, they expect its revenue and adjusted EBITDA to grow at a CAGR of 17% and 66%, respectively. That growth should be driven by the expansion of its fintech ecosystem with more traditional banking, wealth management, and AI-powered investment services. It's also "tokenizing" more U.S. Treasuries, stocks, exchange-traded funds (ETFs), and even special purpose vehicle (SPV) investments in private start-ups on its own blockchain. Those tokenized assets could be traded faster at lower fees than their underlying investments. It will also likely acquire more companies to gain new customers and assets.
Should you buy Robinhood's stock before its next earnings report?
With an enterprise value of $115.6 billion, Robinhood might look a bit pricey at 35 times next year's adjusted EBITDA. However, its strong growth rates, expanding customer base, and sticky ecosystem could all justify that higher valuation.
If you expect Robinhood to continue drawing investors away from traditional brokerages as declining interest rates spark a resurgence in speculative trades, then it may be smart to buy its stock ahead of its next earnings report in February.
