Photo by CHRIS DELMAS/AFP via Getty Images
AFP via Getty Images
Robinhood Markets (NASDAQ:HOOD) stock has experienced an impressive ascent in 2025, currently trading at approximately $130 per share. Robinhood is recognized for abolishing trading commissions and making stock investing more accessible through its user-friendly mobile application, resulting in a stock increase of over 3x since early January. This growth has been fueled by earnings momentum, a rapidly expanding user base, and increasing involvement in the booming cryptocurrency market. The company was recently incorporated into the S&P 500 in September, providing a structural advantage as passive funds and ETFs that track the benchmark are compelled to purchase. Q3 earnings also exceeded expectations. Revenue approximately doubled year-over-year to $1.27 billion, while net income rose to $556 million, $0.61 per share, up from $150 million, or $0.17 per share during the same period last year.
Could Robinhood’s stock, currently around $130, rise again to $200 within the next few years? This possibility is not unfounded. It’s worth noting that the stock was priced at only $55 in mid-May 2025, and it has already more than doubled in just over five months. While it appears that the stock is trading at roughly 54x trailing earnings, which may seem high at first glance, when considered alongside increasing profitability and expanding market opportunities, a stock price exceeding $200 in the near future appears feasible. In the following sections, we will analyze Robinhood’s revenues, margins, and valuation multiples to illustrate how this scenario could materialize.
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1. Robinhood’s Revenue Growth Potential
HOOD’s revenues have increased significantly from $280 million in 2019 to about $2.9 billion in 2024, reflecting an annual growth rate of nearly 60%. It appears that this momentum could continue. Consensus estimates suggest close to 53% revenue growth for 2025, reaching about $4.5 billion, although growth is expected to decelerate to around 18% for the following year. Nonetheless, there exists a tangible opportunity for HOOD to maintain an average annual growth rate near 35% over the next few years, driven by continued customer expansion, significant potential in the cryptocurrency sector, and wealth management solutions.
With this in mind, revenues could increase from an estimated $4.5 billion in FY’25 to around $8.2 billion by FY’27, representing an increase of over 82%. Here’s a more detailed look at the factors that could spur this growth.
Monetizing a Larger Customer Base: Robinhood has demonstrated agility and innovation, with a solid grasp of younger retail investors, resulting in substantial user growth. Funded customer accounts rose by 2.5 million, or 10%, year-over-year to 26.8 million in the last quarter, while platform assets surged 119% year-over-year to $333 billion. This expanding asset base serves as a revenue generator, enabling increased trading activity, higher interest income on idle cash, and enhanced potential for advisory fees.
Push Into Crypto: Robinhood’s cryptocurrency revenues skyrocketed by 98% last quarter to $160 million, coming close to a sixth consecutive quarter of triple-digit growth. The company has also been enhancing its operations through acquisitions, having completed the acquisition of global cryptocurrency exchange operator Bitstamp in June, which provided over 50 active licenses and registrations worldwide. This move has bolstered its enterprise efforts by improving its lending and staking infrastructure and offering more specialized products designed for hedge funds, fintechs, and registered investment advisors. A more favorable regulatory environment and growing political support, including from the Trump administration, have further stimulated investor enthusiasm for the stock.
A Valuable, Young Demographic: Robinhood’s user base is predominantly composed of millennials and younger investors. A significant wealth transfer is anticipated to occur from older generations to millennials and Gen Z over the next two decades, amounting to tens of trillions of dollars. By engaging these users at an early stage, Robinhood positions itself to profit as their assets and investment demands grow over time. As millennials mature, their financial requirements will also diversify with time. To address this, Robinhood has started offering products beyond just trading—such as retirement accounts, high-yield cash balances, and wealth management tools—to retain users as their financial stature evolves. While this may represent a longer-term theme for the stock, it is undeniably an important one.
New Frontiers: Robinhood has also exhibited a keen ability to swiftly identify and capitalize on emerging opportunities. A prime example is its prediction markets business, which was launched around the time of the 2024 U.S. presidential election cycle. This product allows users to trade contracts linked to real-world events. The momentum seems robust: in October alone, more than 2.5 billion event contracts were traded on the platform, generating over $100 million in annualized revenue within a year of its launch. This success underscores Robinhood’s capability to leverage its vast retail customer base, gamified interface, and regulatory flexibility to branch into new ventures.
2. Margins Have Scope To Expand
When this strong revenue growth is combined with the fact that HOOD’s adjusted net margins (net income, or profits after all expenses and taxes, calculated as a percentage of revenues) are on an upward trajectory; they increased from negative levels in FY’21 to approximately 35% in FY’24. This growth has been fueled by significant gains in high-margin revenue channels like payment for order flow and margin interest. Additionally, substantial growth in transaction volumes, particularly in crypto, has also benefited the company. Robinhood’s business model possesses considerable operational leverage, as costs do not necessarily increase with revenue. A large portion of its cost structure—including technology infrastructure, compliance, and support—is relatively fixed or rises only marginally with user growth. Consequently, each additional dollar of revenue could disproportionately enhance profits. Margins could potentially continue to trend upwards, possibly reaching around 40% considering these trends. By combining 40% adjusted net margins with approximately $8.2 billion in revenue, we can anticipate earnings of about $3.3 billion, which represents roughly a 3x increase from the levels seen in 2024.
3. Lower P/E Contraction, Stronger Earnings Drive Higher Stock Price
If earnings were to grow 3x, the price-to-earnings multiple would contract by 3x, from levels of approximately 21x, provided the stock price remains unchanged. Yet, that is precisely what HOOD investors are betting will not transpire. If earnings expand 3x in the coming years, rather than the P/E declining from around 54x now to about 18x, a scenario in which the P/E ratio holds steady at around 35x becomes more probable as strong growth and improving margins bolster investor confidence in HOOD stock’s future.
The company’s addition to the S&P 500 may also help maintain a higher multiple due to the increased visibility, index fund flows, and broader institutional participation that typically accompany such inclusion. This development makes the prospect of HOOD stock reaching levels over $250 within the next few years a realistic possibility. What, then, is the anticipated timeline for this high-return scenario? While our example above illustrates a timeline of approximately two years, in practice, it won’t make much difference whether it takes two years or three, as long as HOOD continues on its revenue expansion path, with margins remaining stable, the stock price could respond similarly.
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