Robinhood (HOOD) Valuation: Examining Wall Street Optimism After Breakthrough Profitability and User Growth

Kshitija Bhandaru

Robinhood Markets (HOOD) has landed squarely in the financial spotlight after marking a dramatic turnaround in its core business metrics. The company recently reported a shift from negative to positive earnings per share, which has energized both retail and institutional investors looking for evidence that the platform can generate sustainable profits. This improvement, combined with impressive growth in the ways Robinhood is monetizing its user base, has drawn fresh optimism among market watchers about what might be next for the fast-moving trading platform.

The stock’s run this year is hard to ignore. Over the last six months, Robinhood has delivered a remarkable 115% rally, powered by back-to-back solid quarters and higher revenue per customer. This wave of momentum stands in contrast to much of the previous year, when markets questioned the company’s path to profitability. Now, as the company posts not only increasing revenue but tangible earnings growth, sentiment appears to be shifting, especially given that engagement and transaction sizes are climbing across its platform.

With the share price surging and operational numbers on an upswing, the question lingers: does Robinhood have further upside, or is the market already factoring in the company’s next phase of growth?

Most Popular Narrative: 10.5% Undervalued

According to the most popular narrative, Robinhood Markets' stock is trading at a notable discount relative to its calculated fair value, based on forward-looking earnings and revenue projections. Analysts contend that recent growth and operational improvements may not be fully reflected in the company's current market price.

The ongoing diversification of Robinhood's product offerings, including the expansion into banking, retirement accounts, credit cards, crypto staking, option products, and tokenized assets, positions the company to tap into a broader addressable market and multiple recurring revenue streams. This may drive resilient top-line growth and higher revenue per user. Sustainable growth in assets under custody (AUC) and average customer balances (which nearly doubled year-over-year) indicates a strengthening long-term customer relationship. Customers are entrusting Robinhood with increasingly significant portions of their net worth, which supports future revenue expansion and increased net deposits.

Does Robinhood’s current valuation capture the company's high-flying ambitions? The narrative centers on a bold mix of rapid expansion, hefty margin calls, and profit assumptions not often seen outside tech’s elite. Get ready to discover the critical numbers and less obvious levers that analysts believe could power the next phase of Robinhood's climb.

Result: Fair Value of $113.09 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heightened regulatory uncertainty and a shift in customer interests toward alternative assets could undermine Robinhood’s optimistic growth projections.

Find out about the key risks to this Robinhood Markets narrative.

Another View: Multiples Tell a Different Story

Looking at Robinhood from another angle, our multiples approach suggests the stock is quite pricey compared to most companies in its industry. Does this mean the market is overestimating future growth, or is something else at play?

See what the numbers say about this price — find out in our valuation breakdown.
NasdaqGS:HOOD PE Ratio as at Sep 2025
Stay updated when valuation signals shift by adding Robinhood Markets to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Robinhood Markets Narrative

If you have a different perspective or want to dig into the figures yourself, you can craft your own take in just a few minutes. Do it your way

A great starting point for your Robinhood Markets research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is complex, but we're here to simplify it.

Discover if Robinhood Markets might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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