Robinhood Markets, Inc. (HOOD): what the price requires
At today's price, Robinhood Markets, Inc. (HOOD) is priced for today's economics sustained for ~19.8 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/HOOD
Headline
| Field | Value |
|---|---|
| Ticker | HOOD |
| Company | Robinhood Markets, Inc. |
| Sector / Industry | Financial Services / Financial Services |
| Current price | $109.48/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | fee-financial |
| Top-of-range earnings growth must hold for | 19.8y |
| Price-to-earnings | 53.2x |
| Earnings yield | 1.9% |
A hybrid: a fee franchise alongside a sizeable balance sheet, valued here on the fee annuity.
Solve inputs: computed at a 15.1% cost of equity; growth searched up to the 20% fee-earnings ceiling; each 1pp moves the implied horizon ~2.8 years.
Reconcile: at the x-ray's 9.3% required return this reads ~7.8 years; the models below use their own rates.
How unusual the bet is: high (limited comparison data)
| Reference | Value |
|---|---|
| cohort percentile (of 50 peers) | 100 |
| sustained it ~10 years at this level | 11% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.17x | 4 | expensive |
| Earnings | 2.82x | 4 | expensive |
| Relative | 1.67x | 4 | expensive |
| Growth | 0.81x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $142.96 | 0.77x | yes | FCF base $3.3B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection |
| DCF Exit Multiple | Growth | $134.68 | 0.81x | yes | Exit EV/EBITDA: 4155.5x / 4157.5x / 4159.5x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $60.36 | 1.81x | yes | P/E 24.24x (blended: static sector reference 12x + trailing (TTM) 53x), scenarios: 19.4x / 24.2x / 29.1x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $22.41 | 4.89x | yes | BV/sh $10.18, ROE (TTM) 20.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $32.93 | 3.32x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $87.78 | 1.25x | yes | Rev $4.6B, growth 30% (input: historical growth; tapered), Terminal P/S: 9.6x / 12.0x / 14.4x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $72.10 | 1.52x | yes | EPS $2.06, growth 35% (input: historical EPS growth), PEG=1.51 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $31.69 | 3.45x | yes | BV $10.18 + 5yr PV of (ROE (TTM) 20.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $21.73 | 5.04x | yes | √(22.5 × EPS $2.06 × BVPS $10.18) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | $40.83 | 2.68x | yes | FCF $3034.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $37.00 | 2.96x | yes | SBC-adj FCF $2.71B (FCF $3.03B − SBC $0.32B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $66.47 | 1.65x | yes | EPS $2.06 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $15.12 | 7.24x | yes | Revenue $4.61B × sector P/S 3.0x |
| PEG Fair Value | Relative | $77.25 | 1.42x | yes | EPS $2.06 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $22.27 | 4.92x | yes | EPS $2.06 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 1.3% |
Custody and consolidated-fund balance sheet: deposits, client cash, and fund-level debt are not corporate leverage, and operating cash flow follows client flows. Net-debt, coverage, and cash-burn lenses are suppressed as misleading; share-count CAGR is kept. The fee-earnings read above is the valuation basis.
Bullet Takeaways
- Robinhood earns a return on equity near 20% and is widening past pure trading into subscriptions, futures, prediction markets, and net interest, but the model still swings with how actively its users trade.
- The biggest risk is that volatility: crypto revenue fell 47% on the year to $134 million last quarter, the single line that turned a 15% revenue gain into a softer print.
- Watch the Gold subscriber count, a record 4.3 million and growing 36% on the year, because recurring subscription and interest income is what would make the business less hostage to any single quarter's trading mood.
Bull Case
The standard knock on Robinhood is that it is a feast-or-famine trading app whose revenue lives and dies on retail speculation, and last quarter handed that bear case a gift: crypto revenue fell 47% on the year. So start there, because the bull case only holds if the business is becoming something more durable than a crypto-cycle proxy. The data says it is. Even with crypto collapsing, total revenue still grew 15% on the year, because the other lines carried it. Transaction-based revenue grew, options activity rose on "a 12% increase in Options Contracts Traded per trader and a 16% increase in the number of users placing option trades," and the company set records across futures, index options, and prediction markets [0001783879-26-000023]. A business that can lose nearly half its crypto revenue and still grow the top line double digits is diversifying in real time.
The more important shift is from transactions to recurring economics. Robinhood Gold reached a record 4.3 million subscribers, up 36% on the year, and the company has built out net interest revenue alongside it, recognizing interest "on a trade-date basis" across margin lending, securities lending, and customer cash [0001783879-26-000023]. Subscription and interest income do not vanish when trading slows; they compound with the customer base and the deposit balance. That is the difference between a brokerage valued as a cyclical and one valued as a platform, and Robinhood is deliberately moving toward the latter, with a return on equity near 20% to show the model already earns well on its capital.
The financial footing supports the expansion. The company sits in net cash by about $5 billion, the share count has been shrinking rather than diluting, and operating cash flow funds the product roadmap without external capital. For a financial business, the relevant strength is capital-return capacity and the ability to invest through a soft quarter, and Robinhood has both. The bull case is not that trading stays hot. It is that each soft trading quarter now matters less, because subscriptions, interest, and an expanding product menu are converting a volatile transaction business into one with a recurring spine.
Bear Case
The price is underwriting a specific future: that Robinhood keeps growing fast across a widening menu of products for a long time, and that the growth is durable enough to outrun a transaction base that is anything but. The 10-K is unusually direct about the fragility. Transaction metrics, it warns, "fluctuate significantly from quarter to quarter, which makes these metrics difficult to predict," and the factors that move them include "reduced spreads in securities pricing, reduced levels of t[rading]" activity [0001783879-26-000023]. That is the company telling investors that the line carrying the most revenue is the least forecastable. The price is paying for compounding; the disclosure is describing a business whose largest input is, by its own account, unpredictable.
Last quarter showed exactly how that plays out. A 47% year-over-year drop in crypto revenue, to $134 million, was enough to turn a quarter of record activity elsewhere into an earnings miss and a 42% sequential decline in net income. The bull narrative says diversification cushions these swings, and it did cushion this one, but the swing was still large enough to be the story. The new growth engines the price is crediting, prediction markets, futures, tokenization, are early and not yet proven across a full down-cycle, and some of them carry regulatory exposure the filing flags directly: proposed "financial transaction taxes could increase the cost to" the customers whose activity is the revenue [0001783879-26-000023]. A growth story built on products that have not weathered a downturn is a thinner foundation than the multiple implies.
The valuation leaves no margin for that thinness. Only the forward-growth method reaches the price; the asset-based, earnings-power, and peer-multiple lenses all read it as richly valued, the asset lens by more than fourfold. At roughly 52 times earnings against a financial-sector median near 12, and more than ten times book value, the stock is priced as if the durable-platform thesis is already settled. The balance sheet is genuinely strong, about $5 billion of net cash with a shrinking share count, so the downside is not insolvency. The downside is that the recurring engines grow slower than the price assumes while the trading base keeps swinging, and a multiple set for certainty re-rates toward the methods that already say expensive.
Valuation
What the price is betting is straightforward: durable, fast compounding across an expanding product set. At $108.17 (as of June 19, 2026) only the forward-growth method reaches the quote. The asset-based lens reads the stock at more than four times what the balance sheet supports, the earnings-power lens at nearly three times, and even the peer-multiple lens lands well below the price. When every static method that values what a company already earns says expensive and only the growth method reaches, the market is paying a durability premium those frames structurally cannot price. For a fast-growing financial platform, that is the honest characterization, not a flaw in the methods.
The numbers behind that read are stark. The stock trades near 52 times earnings against a financial-sector median around 12, and at more than ten times its $10.18 of book value per share. A traditional financial is read on return on equity, and Robinhood's near 20% is genuinely good, but a 20% return on equity capitalized at any normal multiple does not reach ten times book on its own. The gap between the roughly 20% return the business earns and the return the price implies it must keep earning, for years, at accelerating scale, is the premium. The peer cohort here, the asset managers and market-structure firms, trades at a fraction of Robinhood's multiple, which sharpens rather than excuses the gap.
Solvency is the one place the story is unambiguous. The company holds about $5 billion in net cash, generates cash from operations, and has been shrinking its share count rather than diluting, so there is no funding risk on the way to any outcome. For a financial business the relevant frame is capital-return capacity, and Robinhood has it. The decisive question for the price is not whether the balance sheet survives; it plainly does. It is whether the recurring and emerging revenue lines, subscriptions, interest, futures, prediction markets, grow into a multiple that today only the most optimistic method can justify.
Catalysts
The first-quarter report, for the period ended March 31, 2026, was a beat-and-miss with a clear culprit. Revenue of $1.07 billion grew 15% on the year but missed the consensus near $1.14 billion, and earnings of $0.38 per share came in just under estimates, because crypto revenue fell 47% on the year to $134 million as the prior year's trading boom faded. The rest of the business held up: transaction-based revenue grew 7% to $623 million, Gold subscribers reached a record 4.3 million, up 36%, and the company logged record volumes in prediction markets, futures, index options, and margin.
Forward signals were mixed but more positive than the headline. The chief financial officer said the second quarter was off to a strong start, with April equity and options volumes on pace to be the highest month of the year and net deposits of roughly $5 billion month-to-date despite tax season. Against that, management raised its 2026 adjusted operating expense and stock-based compensation outlook to a range of $2.7 billion to $2.825 billion, about $100 million higher, to fund infrastructure for new account types, a sign the growth is being bought with rising investment.
Analyst sentiment has been moving up alongside the product expansion. JPMorgan lifted its target to $98 from $47, citing new product launches and the Bitstamp acquisition, while Bernstein set a $160 target with an Outperform rating, noting Robinhood's share of U.S. retail crypto and equity-options activity. The catalysts to watch are the adoption curves on the newer lines, prediction markets and tokenization in particular, since those are the engines the valuation is crediting most.
Peer Cohorts (Per Segment, With Filing Citations)
Robinhood (single segment) (reported)
- VIRT (Virtu Financial, Inc.)
- (no filing in the citation store)
- SCHW (SCHWAB CHARLES CORP)
- (no filing in the citation store)
- IBKR (INTERACTIVE BROKERS GROUP, INC.)
- (no filing in the citation store)
- FRHC (FREEDOM HOLDING CORP.)
- (no filing in the citation store)
- TW (Tradeweb Markets Inc.)
- (no filing in the citation store)
- PIPR (PIPER SANDLER COMPANIES)
- (no filing in the citation store)
- BGC (BGC Group, Inc.)
- (no filing in the citation store)
- BLK (BlackRock, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Robinhood Q1 FY2026 earnings release · Robinhood Q1 FY2026 earnings call · JPMorgan note, 2026; Source: Bernstein note, 2026