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Hello readers,
Some of the top-performing “altcoins” of this cycle weren’t tokens at all — they were crypto equities. And nothing ran harder than Robinhood. The stock climbed 17× in under two years, turning one of our most contrarian buys (HOOD was down 80% from its IPO price in ’22) into a major win for the portfolio.
We first accumulated shares in the last bear market (avg. cost $21.49) and exited in October, locking in gains of more than 550%.
Now, with product momentum accelerating and an expanding revenue mix compared to just two years ago, Robinhood is officially back on The Watch List (our bear market shopping list).
Today’s report is a data-driven update on the company’s fundamentals, valuation, and ambitious push deeper into crypto and prediction markets.
Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.
Let’s go.
Data: Yahoo Finance, Robinhood
Robinhood did $2.95 billion in revenue in 2024, up 58% over ‘23. Through Q3 of this year, they’ve generated $3.19b — already surpassing last year’s totals.
Over the last twelve months, the company generated $4.2b (up 31% year-over-year).
Below, we break down the sources of revenue and growth across each line.
Data: Robinhood 10Q
Robinhood’s revenue has grown at a 34% CAGR over the last five years. It generated a record net profit of $565m in Q3 (a 271% increase over the prior year).
Crypto is responsible for 21% of Robinhood’s total revenues YTD (same as last year).
Transaction-based revenues YTD are $1.85b (up from $1.65b in ‘24). In total, transaction-based revenues make up 58% of total revenues (down from 77% in ‘21).
This tells us that 1) transaction-based revenues are growing (across equities, options, and crypto), and 2) Robinhood has been adding new lines of revenue.
What are those new lines of revenue? Prediction Markets (via Kalshi) have already reached $100m annualized revenue. This is their fastest-growing business line ever.
Robinhood Gold now has 3.9 million users paying $5/month, generating $234m in annual subscription revenues. We use the product ourselves.
Fees on instant withdrawals, futures markets, and interchange revenues (Robinhood credit card) add to “other revenue.”
In addition to its transaction-based revenue and new lines of revenue, Robinhood has done over $1.1b of net interest revenue through Q3 (35% of total revenue).
Data: Robinhood 10Q
Options are Robinhood’s cash cow.
Crypto is #2, despite representing just 12% of equity trading volume.
This highlights the superior business model for crypto trading that Robinhood has tapped into.
Equities trading accounts for 88% of trading volume but just 7% of transaction revenues.
Data: Yahoo Finance
Data: Robinhood
Robinhood has 27.1 million funded customers as of 9.30.25. The five-year CAGR for user growth is 22.6%. Most of that growth came in 2020.
Data: various sources
Hyperliquid (perps + spot trading) dwarfs everyone in trading volume, but produces the least amount of revenue.
Uniswap is having the hardest time monetizing its users, as 100% of trading fees historically were paid to the liquidity providers (changing with recent governance proposal).
Coinbase’s user base is 3x smaller than Robinhood, but revenue is nearly 2x larger.
Meanwhile, Coinbase trades at a 53% discount to Robinhood on a market-cap basis.
Why?
We think the market favors Robinhood due to:
Diversified business across equities, options, prediction markets, and crypto.
Perception of Robinhood as a “super app” tapping into consumer/retail finance. Coinbase is viewed more as a “crypto exchange” still (even though it’s much more).
Regulatory licenses. Robinhood is registered as a broker-dealer and regulated by FINRA and the SEC. Coinbase is not. That means Coinbase cannot offer stocks, options, margin lending, etc.
It has a larger, active user base. Coinbase has struggled to grow its user base since ‘21.
In terms of TradFi comps, Robinhood did 18% of Charles Schwab’s revenue over the last twelve months. Charles Schwab has 38 million active accounts (27.1 for Robinhood).
A brief history of Robinhood’s crypto journey.
Robinhood officially launches crypto trading in select states, initially supporting BTC & ETH.
Robinhood receives a BitLicense from NY State, allowing it to offer crypto trading in NY.
Robinhood experiences a significant increase in crypto trading volume. This coincided with a substantial increase in Robinhood’s user base as COVID marked a period of renewed interest in stock and crypto trading from retail investors.
Robinhood reports that crypto accounted for 41% of its revenues in Q1, driven largely by Dogecoin trading (25% of all revenues!). Later in the year, Robinhood files for an IPO, citing crypto trading as a material portion of its business.
Robinhood announces plans to roll out a crypto wallet feature, allowing users to deposit and withdraw crypto assets.
Robinhood announces the addition of several new crypto assets for trading on the platform, as well as expansion plans into the EU.
Robinhood announces a partnership with Arbitrum (Ethereum Layer 2) to allow users to access swaps on Arbitrum DEXs. The team later announced an integration with MetaMask, allowing users to buy crypto on Robinhood and fund their wallets with debit cards, bank transfers, or funds from their existing Robinhood accounts.
The team later launched staking services for European customers, and a crypto trading API — offering access to market data and programmatic orders.
Robinhood acquires Bitstamp, a global crypto exchange with 4.4m users and $200m in revenue.
Launched support for Base (Coinbase’s L2)
Became a primary crypto onramp for retail traders (more assets, wallet onramps, integrations, low fees)
Full integration of Bitstamp’s exchange
Launch of Robinhood Crypto Wallet v2 (cross-chain swaps, DeFi connectivity, Arbitrum functionality, potential Base & Solana swaps, web3 wallet experience)
Awaiting approval for U.S. crypto staking
Institutional crypto services via Bitstamp
Announced plans to build an L2 on Arbitrum
Announced plans to tokenize both public and private equities (24/7 trading, instant settlement, integrations with DeFi, global access for users outside the U.S., reduced cost structure vs traditional brokerage rails)
That last bullet point is where Robinhood planted the seeds to go “full crypto,” leveraging its infrastructure (Bitstamp, Robinhood Crypto, Arbitrum) and user base across:
A regulated global exchange
A custody solution with integrated staking
Tokenization with integrations to DeFi
Wallets & payments
On/off ramps
The takeaway?
Robinhood is building a full-stack tokenization + crypto trading & financial services platform.
The DeFi Report
Nearly 800 tokenized public equities live in the EU, expanding to private equity
Trading only with the Robinhood app (no external transfers)
Built on Arbitrum
We are tracking Robinhood’s tokenization activity on Dune. You can monitor that here.
Use of Bitstamp enables 24/7 trading, mirroring crypto
Global access + continuous liquidity
Tokenized stocks become withdrawable and composable across DeFi
Users can use tokenized equities as collateral within DeFi (e.g. Aave)
Final vision: fully permissionless, programmable assets beyond brokerages
Unlike equities (where Robinhood relies heavily on payment for order flow), crypto trading uses a completely different and far more profitable revenue model. Because there is no NBBO (National Best Bid and Offer) in crypto markets, Robinhood does not sell order flow to market makers. Instead, it earns revenue through spreads and routing economics, capturing the difference between the price it quotes to users and the price at which it sources liquidity (internally via market makers or through Bitstamp).
This means they have more control over trading economics and can keep a higher % of the revenue from each crypto trade. The end result is meaningfully higher margins, higher ARPU, and better operating leverage.
Global addressable market. Crypto trading is 24/7, and works across jurisdictions and time zones.
Staking, tokenized equities, swaps, wallet fees, L2 fees, and programmatic crypto order flow can all expand margins and revenues.
Demographics. Robinhood primarily serves millennials and Gen Z, who will inherit the wealth of baby boomers in the coming years and increasingly prefer crypto-native services + Robinhood’s best-in-class mobile experience.
Crypto rails reduce costs, generate new revenue streams, and increase operating leverage. With infrastructure now in place, Robinhood could become the “front-door” to DeFi, staking, trading, payments, etc.
By sprinting first toward crypto, Robinhood is building a moat via its 1) user base, 2) suite of services, and 3) crypto infrastructure. We think this will be difficult for incumbent platforms like Charles Schwab to compete with, especially as customer demographics shift.
Every major brokerage and trading platform is currently implementing crypto trading. Charles Schwab. Fidelity. Interactive Brokers. Webull. E*Trade.
They’re all coming for those fat crypto trading fees. This competition will likely compress margins for Robinhood.
Meanwhile, Coinbase has a lead in crypto-native infrastructure and product suite.
The team needs to execute a massive undertaking to marry Robinhood’s best-in-class UX and mobile app onto crypto rails. It won’t be easy.
The true benefit of tokenization is when the actual shares are tokenized.
Why?
This means the shareholder’s crypto wallet (KYC’d) is the official record of ownership. Which means dividends are paid to the wallet.
Now. Robinhood does not get to decide which stocks get tokenised and which don’t. The issuer (the company) decides.
Is there an incentive for them to tokenize today?
That’s TBD, in our opinion. We think they will want to tokenize if they can:
Lower issuance costs
Broaden distribution
Improve liquidity
Reduce settlement friction
Unlock new investor segments globally
Today, none of these benefits is strong enough to motivate large incumbents to tokenize. Certainly not before new regulations are put in place.
Furthermore, their shareholders are not demanding this today. And we think incumbent service providers such as transfer agents, prime brokers, custodians, settlement networks, market makers, fund admin/middle office are all opposed to this.
The takeaway?
Robinhood is massively incentivised to push tokenisation. However, they have limited control over issuers' adoption of it. We think this will take longer than the market is currently anticipating.
Robinhood has grown revenues at a 34% CAGR over the last five years. In recent years, growth has been coming across all trading lines (crypto, equities, and options).
Additional revenues from Robinhood Gold, prediction markets, and crypto services (wallet, staking, transfers, expansion in Europe, crypto-linked cards, Arbitrum L2) point to a bright future.
We like the leadership team. The track record of delivering wonderful UX. And the vision to go “full crypto.”
We use the product and ported our assets (they make the process seamless and quick). By offering incentives to transfer assets (2-4% cash bonus on value transferred), Robinhood is essentially running a vampire attack on Charles Schwab, Fidelity, Coinbase, etc.
Meanwhile, they are now challenging Coinbase on crypto-native services while leading on tokenization strategy.
We think Robinhood is positioned to become a leading financial institution of the future.
With that said, it’s currently trading at a price/earnings of 56. We think crypto revenues (now a material 21% of revenue) will take a hit in the near term, as well as general risk-on sentiment amongst retail investors.
Given that revenues declined 25% in ‘22 amongst an 80% drawdown, we could see a similar significant correction in a risk-off environment. We think this could present a great buying opportunity for a long-term hold.
That’s why HOOD is on The Watch List.
If you’d like to be notified if/when our price targets are hit, and we add HOOD back to the portfolio, you can sign up here.
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And Stay Curious.
Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.