Three Reasons Investors Love Robinhood (HOOD)

December 09, 2024 at 01:49 AM EST

HOOD Cover Image

What a fantastic six months it’s been for Robinhood. Shares of the company have skyrocketed 76.8%, hitting $41.40. This performance may have investors wondering how to approach the situation.

Is it too late to buy HOOD? Find out in our full research report, it’s free.

Why Are We Positive On HOOD?

With a mission to democratize finance, Robinhood (NASDAQ: HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.

1. Eye-Popping Growth in Customer Spending

Average revenue per user (ARPU) is a critical metric to track for fintech businesses like Robinhood because it measures how much the company earns in fees from each user. ARPU also gives us unique insights into the average transaction size on its platform and Robinhood’s take rate, or "cut", on each transaction.

Robinhood’s ARPU growth has been exceptional over the last two years, averaging 31.4%. Its ability to increase monetization while growing its funded customers demonstrates its platform’s value, as its users are spending significantly more than last year. Robinhood ARPU

2. Elite Brand Reduces Need for Marketing Campaigns

Unlike enterprise software that’s typically sold by dedicated sales teams, consumer internet businesses like Robinhood grow from a combination of product virality, paid advertisement, and incentives.

Robinhood is extremely efficient at acquiring new users, spending only 10.8% of its gross profit on sales and marketing expenses over the last year. This efficiency indicates that it has a highly differentiated product offering and strong brand reputation, giving Robinhood the freedom to invest its resources into new growth initiatives while maintaining optionality. Robinhood User Acquisition Efficiency

3. Outstanding Long-Term EPS Growth

We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Robinhood’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.

Robinhood Trailing 12-Month EPS (Non-GAAP)

Final Judgment

These are just a few reasons Robinhood is a rock-solid business worth owning, and with the recent rally, the stock trades at 34.3× forward EV-to-EBITDA (or $41.40 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

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Symbol	Price	Change (%)
AMZN	215.88	+2.84 (1.33%)
AAPL	263.16	+10.87 (4.31%)
AMD	242.04	+8.96 (3.85%)
BAC	52.16	+0.88 (1.72%)
GOOG	256.79	+3.00 (1.18%)
META	731.96	+15.05 (2.10%)
MSFT	517.60	+4.02 (0.78%)
NVDA	184.12	+0.90 (0.49%)
ORCL	278.25	-13.06 (-4.48%)
TSLA	443.06	+3.75 (0.85%)

Symbol

Price

Change (%)

AMZN

215.88

+2.84 (1.33%)

AAPL

263.16

+10.87 (4.31%)

AMD

242.04

+8.96 (3.85%)

BAC

52.16

+0.88 (1.72%)

GOOG

256.79

+3.00 (1.18%)

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