Here's Why Robinhood Stock Is a Buy Before July 30

Key Points

  • Rapid Growth: Robinhood has seen significant expansion, doubling its funded customers from 2020 to 2024 and tripling its assets under custody, with revenue growing at a 32.5% CAGR.**
  • Expanding Ecosystem: The platform has broadened its offerings with crypto and options trading, AI-powered tools, and tokenized assets, enhancing its appeal to retail investors.**
  • Improved Margins: Gross margins increased from 88% to 94.4% between 2020 and 2024, driven by higher-margin services and economies of scale.**
  • Regulatory Relief: Recent withdrawal of SEC regulations against payment for order flow (PFOF) trades clears a major hurdle for Robinhood’s commission-free model.**
  • Reasonable Valuation: Despite a high enterprise value, Robinhood’s growth potential, with expected revenue CAGR of 18% through 2027, makes it an attractive investment.**

Summary

Robinhood Markets (NASDAQ: HOOD) has experienced a remarkable 350% stock surge over the past year, fueled by rising stock and crypto prices that boosted trading volumes on its platform. Despite this rally, the article argues that Robinhood remains a compelling buy before its July 30 earnings report. The company has rapidly expanded, doubling its funded customers and tripling assets under custody from 2020 to 2024, while achieving a 32.5% revenue CAGR. Its ecosystem now includes crypto, options, and tokenized assets, alongside AI tools and banking services. Margins have improved significantly, with gross margins reaching 94.4% in 2024, supported by economies of scale and high-margin offerings. Regulatory concerns over its payment for order flow model have eased with the SEC’s withdrawal of proposed restrictions. Additionally, subscription revenue from its Gold tier is growing, diversifying income streams. While its valuation appears high at 50 times adjusted EBITDA, analysts predict an 18% revenue CAGR through 2027, suggesting strong growth potential. The article highlights Robinhood’s appeal to retail investors through free trades and gamified investing, positioning it as a disruptor to traditional brokerages, though it notes caution with The Motley Fool not including it among top stock picks.

The Motley Fool
July 20, 2025
Crypto
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