Robinhood Doesn’t Need Crypto: Buy Post Q1 2025 Results

Summary Robinhood Markets, Inc. reported in Q1 2025; that a crypto boost to revenue was missing as I predicted in March. I think there are new growth stories on the table for this one. I’m expecting the company to continue monetizing its customer base as it carves itself a permanent position as a trading platform. New product rollouts, including Robinhood Strategies, Cortex AI, and Robinhood Banking, diversify offerings and position Robinhood as a comprehensive financial services platform. At current levels, HOOD is a cheap growth stock, in my opinion, trading in the mid-$40s range. I hereon share my sentiment on Robinhood stock and why I think there are more upsides ahead. Investment Thesis When I last covered Robinhood Markets, Inc. ( HOOD ) back at the end of March, crypto trades were flying, and Robinhood was left to sweep up all the profits off the back of a strong trading quarter. I anticipated the company to experience a pullback in revenue this quarter due to the lower crypto trades between January and March, and that’s exactly what happened. But anyone tracking crypto volume could tell that was going to happen. Total revenue dropped roughly $90 million, and revenue from crypto trading saw a $106 million drop. My original thesis saw Robinhood offsetting this strong loss on crypto trades through Robinhood Gold and personalized wealth management services. I think that’s precisely why the revenue drop wasn’t as bad as it could’ve been; we are seeing Robinhood grow revenue in areas other than crypto, and that’s what gets me excited about this stock. Listen, Robinhood’s success is still heavily influenced by crypto trading, and one can still gauge their success based on trading volume. This quarter, we are starting to see Robinhood divest and separate itself financially from being a crypto trading platform. In light of this quarter’s report, I reinstate my buy call on Robinhood. I’m expecting the company to continue monetizing its customer base as it carves itself a permanent position as a trading platform and even a bank of sorts, exposed to positive trends from crypto but not entirely reliant on them. Q1 2025 Earnings Review Robinhood stock has been on quite the roller coaster since I covered them last. Heading into the earnings report, the stock was hovering around the high $40s range, with a lot of excitement getting priced in. Right before earnings Wednesday, the stock was trading around $46-47 a share, and although earnings didn’t showcase the numbers, we saw last quarter, investors didn’t take it as a bad sign, at first, with the stock up 5% in pre-market trading. During trading hours on Thursday, however, things quickly reversed, and the stock price dropped 5% to around $46. Here’s the thing. It’s tough to compare this quarter’s numbers to last quarter because we saw hypergrowth on Donald Trump’s election win, which pushed crypto trading to new heights. But even with that tough comparison, the numbers this quarter were pretty good. Revenue was impressive compared to two quarters ago; the company reported revenue of $927 million in Q1 2025. While not the $1 billion we saw in Q4 ’24, it still shows promising growth. To put the revenue in context, Robinhood averaged $645 million in revenue from Q1 ’24 to Q3 ’24; they have now exceeded that average by $280 million. Let’s break down where this money came from. The largest share, at $583 million, just came from transactions on their trading platform. Remember, every time someone makes a trade, Robinhood swipes its cut. The other $334 million came from interest on the cash they hold for their customers. The money that is made on interest stays reliably consistent quarter over quarter, so what we’re interested in is the increase in trading activity. Q1 2025 trading revenue is the second-highest it has been since last quarter, and a large chunk of it came from crypto trades, specifically $252 million. That’s 27% of the total revenue; I think with time we’ll be seeing a reduction in the revenue dependence on crypto trades, which I like because I think it’ll enable Robinhood to have a more sustainable growth story. TheTechie Robinhood Keeps Diversifying Its Product Just like I predicted, Robinhood has been working hard to roll out new products. On the earnings call , CEO Vlad Tenev announced three new products, and their offerings don’t surprise me; all of them push the platform away from a crypto trading app and more into the banking/financial services market. They now offer “Robinhood Strategies,” which rolled out last month, already amassing 40,000 customers and over $100 million in assets. Strategies help customers with portfolio management and carry a maximum price tag of $250, depending on the value of your assets. I think this offering could be a hit, as it’s one of the few personalized asset management tools offered in this price range, and it really allows for portfolio management to be accessible to a broader audience. In addition, they’ve rolled out Cortex, a friendly AI investment assistant to help analyze market trends, and Robinhood Banking for customers to store and spend their cash. Either way you look at it, Robinhood’s new product diversity will bring them growth in a competitive market. They’re aiming for customers to keep the money they save and the money they trade all in one place. This kind of convenience sets them apart from their competitors. Valuation The market cap now sits at $41.1 billion. In terms of stock price, Robinhood is currently trading at $46. Earnings per share are $1.60. Seeking Alpha gives Robinhood a forward price-to-sales ratio far higher than the sector median of 2.6 at 14.66. I wouldn’t dwell too much on this number, as I think Robinhood is a classic growth stock. What’s Next In terms of crypto trading volumes, it is still quite a powerful indicator of Robinhood’s revenue; the numbers for April report 1.28 trillion transactions. To give investors a rough idea to go by, Robinhood generated over $900 million in revenue when a quarter saw 5.5 trillion transactions and over $1 billion when a quarter saw over 6.6 trillion transactions. Investors should still keep a close eye on crypto transactions, as Robinhood still leans on it. As for their new product rollouts, I expect the Robinhood Gold subscriber base to grow, along with users paying for their portfolio management tool. Overall, I remain bullish on the stock; however, investors looking to jump in between now and the next earnings report should know that this stock can be quite volatile. Robinhood regularly drops into the low- to mid-$40 range, that’s where I see a buying opportunity.

Source: Seeking Alpha