-
Robinhood’s financials have improved significantly in recent years and it now generates impressive margins.
-
Its valuation has gotten a boost from retail investors, as it trades at a high premium.
-
If investor sentiment sours, however, the stock could decline — as it did in 2022.
-
10 stocks we like better than Robinhood Markets ›
Robinhood Markets (NASDAQ: HOOD) went public just over four years ago, and it has already grown to a market cap of around $130 billion. It has established itself as a top trading platform, especially among young investors. In just the past 12 months, the stock has climbed more than 420%.
The business has been thriving as its platform makes it easy to trade stocks and crypto, and even place wagers on prediction markets. It has expanded in size and with so much growth under its belt already and a lot more still on the horizon, the stock looks unstoppable. Could it potentially join the trillion-dollar club by 2030?
Although $1 trillion in market cap would be a significant increase from where the business is today, I believe it is a possibility. For one thing, Robinhood has generated explosive growth in recent years, and if that trend can continue, its valuation would be sure to rise along with it.
The business has gone from being unprofitable as recently as 2023 to now generating impressive profit margins of around 40%. If the business can continue to scale and expand into more prediction markets (it recently launched markets for the NFL and college football), its earnings could skyrocket.
The stock is also highly popular with retail investors, which can often push valuations higher than they otherwise would be based on just fundamentals alone. Currently, Robinhood’s price-to-earnings multiple is over 70; investors are clearly bullish on the business and its long-term growth potential.
While it may not be an easy path to get to $1 trillion (Robinhood would need to rise close to 670% in value from where it is today), the stock’s performance this year is a terrific example of how hot it can get in a short amount of time. And with ample growth opportunities to tap into in crypto, stock trading, and prediction markets, I think it’s entirely possible that Robinhood could join the trillion-dollar club by the end of the decade — but that doesn’t mean it’s a sure thing by any means.
As promising as the future looks for Robinhood, there are obstacles that could get into the stock’s way. A big one is the overall sentiment in the market. Robinhood is doing well this year, and it comes at a time when meme stocks and risky investments are hot buys. When Robinhood went public in 2021, it also benefited from similar trends.
