Robinhood Markets (HOOD 3.21%) had a fantastic 2025, with a gain of more than 200%. That caps a three-year climb of 1,360%, making it one of the best stocks to have owned during that timeframe.
The stock has started to dip, but every stock has ups and downs on its way higher. Is this the beginning of a fall? Or is it a bump on the road to helping investors reach millionaire status?
Image source: Getty Images.
Investing for all
Robinhood's mission is to create an investing ecosystem for active traders, and it's launching many new services to keep them on the platform, as well as a large array of adjacent financial management services. "We want active traders to feel like they are at a disadvantage if they trade anywhere other than Robinhood," Chief Executive Officer Vlad Tenev said on the third-quarter earnings call.
Although the company became famous for hosting the meme stock run a few years ago, it has branched into all kinds of trading, including options and cryptocurrency that aren't available on all stock trading platforms. These alternative trading categories have become a large part of total revenue, and Robinhood is investing in improved features to make it as seamless as possible to trade.
However, it's also rolling out traditional financial services like credit cards and bank accounts. These accomplish several goals for the company, including providing new revenue drivers, creating a complete ecosystem to keep customers engaged, and building a more stable model.
It's introducing new products at a fast pace, but there's so much more to come. Some recent, notable product rollouts include Prediction Markets, or online betting, and Robinhood Social. It continues to bring out new products in new locations, like the recent launch of futures trading in the U.K.
Customers are coming
Users are reacting positively to Robinhood's expansion efforts, and the business has been exploding. The third-quarter results are a telling snapshot of what's been happening recently; revenue doubled from last year to $1.3 billion, and net income increased 271% to $556 million. Platform assets were up 119% to $333 billion.
Funded customers increased 10% year over year to 26.8 million, and Gold customers, who pay an annual $50 fee, increased 77% to 3.9 million. Gold members get several perks, including a 3% match on retirement fund contributions and a high yield on uninvested cash.
Investors should note that Robinhood's expansion into trading alternative asset types is responsible for a large amount of recent growth. Cryptocurrency revenue increased 300% year over year to $268 million, or more than a third of total transaction revenue.
NASDAQ: HOOD
Key Data Points
Robinhood is just getting started
Many stocks can make you a millionaire, depending on how much you invest initially. Let's evaluate whether Robinhood is the kind of stock that can turn $1,000 or $10,000 into $1 million over time.
The way Robinhood is operating today, it looks like it has a huge growth runway. It can expand in multiple directions, in terms of product type and geographic region, and it's drawing millions of fans who are buying into its ecosystem. It's unlikely to keep up triple-digit percentage growth over time, but even if it falls to high double digits, as earnings increase with scale, the stock could climb much higher. It only has $4.2 billion in trailing 12-month revenue, so it's small for a financial services company, giving it more room to run.
For example, if it were able to grow at a compound annual growth rate (CAGR) of 25% during the next 10 years, it would reach $39 billion in revenue, or almost 10 times the current amount. Keeping the price-to-sales (P/S) ratio constant at the current 25, the price would increase 10-fold, too. That would turn $100,000 into $1 million over a relatively short amount of time. Even longer could potentially turn a smaller amount into $1 million as well.
The cracks in that thesis are that the stock is very expensive today, and it isn't likely to keep its P/S ratio for the long haul. It's also highly exposed to cryptocurrency, which is one reason the stock has declined recently, since Bitcoin (BTC 0.82%) and other cryptocurrencies have deflated.
This isn't a bet for the risk-averse investor, but it does look like there's a possibility that Robinhood stock could be the ticket to millionaire status.
