Robinhood's (HOOD 3.34%) stock rallied more than 600% over the past three years. The online brokerage's stock soared as declining interest rates, the AI boom, and a "fear of missing out" propelled the market to record highs and attracted a fresh rush of retail investors.
From 2022 to 2025, Robinhood's revenue surged from $1.4 billion to $4.5 billion. It turned profitable in 2024, and its net income rose 33% to $1.9 billion in 2025. From 2025 to 2027, analysts expect its revenue and net income to grow at CAGRs of 19% and 18%, respectively.
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That growth should be driven by the expansion of its Gold subscription platform, which served 4.2 million of its 27.0 million funded customers at the end of 2025, as well as by the expansion of its fintech ecosystem with additional digital banking features and new acquisitions. Its stock also still looks reasonably valued for a growth stock at 33 times this year's earnings, and it could soar even higher as the volatile market drives investors to trade more actively.
However, investors who are bullish on Robinhood but crave even bigger gains might be interested in Direxion's Daily Hood Bull 2x ETF (HODU 5.92%), which aims to double the daily returns of the underlying stock. Let's see how that works -- and if it's a safe long-term investment.
NASDAQ: HOOD
Key Data Points
How does HODU double Robinhood's gains?
HODU is a leveraged ETF that invests in Robinhood's stock through total return swaps. This means that for every $100 million Direxion wants to invest in Robinhood, it has a bank make a $200 million loan to the stock on its behalf through a "synthetic" loan.
Every day, the bank pays Direxion double the daily return of Robinhood's stock. In return, Direxion pays the bank interest on that derivatives contract until it expires. Those returns aren't cumulative; they reset every day. So while HODU might double Robinhood's gains on a green day, it will also double its losses on a red day. Since the beginning of the year, HODU's shares have declined 60% -- compared to a milder 33% decline for Robinhood's shares.
That structure, along with its high net expense ratio of 0.97%, makes it better suited for short-term traders than for long-term investors. Leveraged ETFs are indeed a "greedy" investment -- and we should recall that Warren Buffett famously warned investors to be "fearful when others are greedy".
