HOOD is bullish: it lagged the market this year, but weakness was mainly crypto, not macro; prediction markets and crypto momentum prevented a bigger fall. It is diversifying beyond trading—assets growing, international expansion, rising operating margins—though growth stays cyclical, and it can scale globally.

Now, if we move on to a completely different player, say, in the fintech sector , a player that has also underperformed relative to the market this year, that is Robin Hood.

Currently, Robinhood's stock is not under significant pressure due to macroeconomic issues such as rising interest rates, and the like. Initially, this was probably due to a significant decline in their cryptocurrency business.

Now, fortunately for them , at the same time, they were working on developing another product, namely forecasting markets. I know there are differing opinions about the forecasting markets product.

Some say it shouldn't be an investment app. While others say: "Well, let them do with it as they please."

But the timing of the market forecast release came at an ideal time for Robin Hood, as the stock price was very favorable. I think that without that, and with the momentum of cryptocurrencies, the stock would have fallen significantly.

Its market capitalization is now $100 billion , and the share price is $113 at the time of writing . It has fallen by only 2% since the beginning of the year. I think it could have gone much lower .

Yes, that's probably true. Again, this is one of the things that separates the reality of the business from market expectations. Cryptocurrencies have always been associated with Robinhood, and also generally with YOLO trading, haven't they?

But if we look more deeply at their work, we will find that in 2020 or 2021, cryptocurrencies were a huge deal for them, and arguably contributed significantly to their fame. The same applies to Yolo trading and the GameStop incident.

Although it damaged their reputation, I didn't have a Robin Hood account at the time.

I have an account now, and I have a Robin Hood credit card . I also have a bank account, although it doesn't have a balance, but they give you a balance when you open some of their accounts.

They have indeed succeeded in developing as a company .

The other thing that I didn't have, and I don't even know if they offered it back then, was Roth IRAs. I am a gold member, so I receive a monthly bonus when I deposit into my Roth retirement account.

My children now have guardianship accounts there.

The basic idea is that they are evolving as a company, and that is the strong motivation behind their success. Looking at their growth, what is truly impressive is the number of products they offer and the number of products people use, as well as the assets being added to their platform .

Yes, assets are growing overall, but the biggest growth is in some of these less attractive businesses, such as retirement services, and that's a good thing . This is good news for the company.

As for prediction markets, I am not a fan of them. I use it from time to time because it's entertaining, you know, for example, to bet on a Viking match. Yes, I think this is closer to betting than to predictions, but legally it is classified as a predictions market.

This allowed it to spread globally. There is no need to discuss this matter today, but it is a helpful factor for the company.

This is something many companies offer, not just Robin Hood. But don't forget that they are usually pioneers in their field, and that's an excellent position when you're making a radical change, not becoming a victim of it.

As for Robinhood, what is interesting is that it trades at a much higher price compared to many other financial technology companies . Therefore, macroeconomic pressures are not a significant factor here.

As for growth, there are certainly still cyclical fluctuations when looking at Robin Hood. In a rising market, a company usually performs much better than it does in a falling market.

But, as I mentioned, it is a company that is constantly expanding and diversifying its business.

I think they have, I don't remember the exact number, several products that generate more than $100 million in revenue for them , which was not the case previously, in 2021. In 2021, the prevailing view was: "If the market goes up, and if people trade, we're going to make a lot of money."

But now, yes, there are many products that the company is launching, and of course, it is launching them outside the United States as well.

But, in reality, Robinhood's idea is not based on more people trading, and therefore the company growing. It's not that more people will use multiple products within the Robinhood system, become regular customers, grow in number, and bring more money into the system.

Thus, we get a more stable Robinhood in the future, whether the market is stable, rising, or falling. In the end, it won't matter.

I believe this is the approach they took after the GameStop debacle. I think they emerged from that crisis, as I mentioned, with a bad reputation. I don't believe there is such a thing as bad publicity, and I think they are a good example here, because they have already been subjected to a lot of criticism, as I say.

But ultimately, it is a company worth $100 million today. It's bigger than ever . So, they were certainly on the right track.

Well, they just launched the gold credit card, and I said to myself, " This is really interesting; they think about things in a completely different way than others." If you are a traditional bank and want to grow your business, you need to build an actual building and hire employees to work in it.

SoFi and Robinhood, however, take a completely opposite path. As a result, they have a high operational leverage. This is why you may see a high price-to-earnings ratio .

But if we look at SoFi and Robinhood, as we have seen over the past five years, their operating profit margins— I think this is the key factor to focus on— continue to rise, because they are able to take advantage of all their investments in technology.

Each new customer is not very expensive, and as you mentioned, their growth is not limited to the United States ; they can expand internationally as well.

So, there are many opportunities in the future. This is somewhat similar , you know , to Netflix entering the television market. You may have a local monopoly on local news, but this will be limited to your region only.

The same applies to banking services. Now, Netflix enters the market and says: "We will not be limited to the United States , but will be everywhere in the world." It's almost the same concept. So, I think that's the real advantage here.

This is why these companies still have enormous potential, because they can become much larger than most of their competitors without having to build a huge physical infrastructure.

I agree. I think that's why I own both of them.