$HOOD · Meet Kevin · 2026-10-27

Robin Hood just reported earnings. Monthly active users came in out of miss and it's making people a little bit nervous. Their net income missed as well. But those monthly active users are what get people really excited.

And so there's some impression that maybe what they're doing is they're trying to send people more, hey, you finally have your Robin Hood gold card. Come join us to get people back into the app.

Uh and as a result of that, their provision for credit losses has skyrocketed. I mean, you went from 26 million on credit losses to 71 in the quarter, up 173%. Plus, their operation costs have gone up quite a bit from 33 million to 79 million in the quarter.

Some of this is because of the expenses on launching the uh prediction market expansion that they've done with Rthera in uh uh the you know, right after the World Cup and sort of scaling this out.

They argue that Rotha is now making them over a hundred million dollars in annual recurring revenue, which is freaking awesome. And it really shows there's a lot of money to be made in the prediction markets.

And because they're not regulated in a way that stock exchanges are, you don't have to have a broker dealer and then a separate exchange and then a separate clearing company. You can kind of have all three of those be Robin Hood in partnership with Roa.

It gives them more opportunity to pick up different parts of that value chain and basically make more dollars which you know who doesn't like making more dollars.

The problem is they didn't make more dollars. Uh their expenses went up so much over here that their total expenses even though Vlad started cutting cost well he's been cutting costs for a few years honestly but even though Vlad managed to cut GNA costs by 12% and only spent 2% more on marketing.

These guys are notoriously a little stingy on marketing. I will say uh and honestly they've got some good products so they don't really have to spend more right so you got to give credit where credit's due.

Uh even though they were very disciplined over here their operating expenses were still up 16% overall.

Uh and so you know that that led to some people scratching their heads a little bit going okay you know how come if we're being so tight over here are these exploding this much?

Is this potentially because we're using the gold card as a loss leader?

Now, my opinion historically has been the answer is yes. Uh the gold card at 3% cash back is probably costing and we've seen this historically that it does. It's a money loser.

We don't have all the details yet because their 10Q is not out yet. It'll be out in a couple days. But this is their earnings release. And usually what we find is that the gold card loses Robin Hood money.

It's essentially a loss leader to get people into the platform using the app regularly.

They're also bragging uh and rightfully so about Agentic AI trading, which is kind of cool, where you can programmatically set up how you want to potentially trade.

They've got, I guess, 200,000 customers using Agentic trading accounts at 10 basis points on stocks. That's only about $1.6 million of revenue. So, it's really a drop in the bucket.

You'd really need those agents trading options if you really want to see them make some more money. But you could see what they're trying to do is grow again because Robin Hood is generally really associated with Bitcoin. More on that in a moment.

But in May, Robin Hood was sitting at 800 uh,000 users. Write that correctly there. They were sitting at 800,000 users on their gold card. And since that's exploded to 1.3 million.

So, I think what's happened is they invited a ton of more people to get into their credit card because I think they think that's going to help them grow their banking business.

That's going to help them grow trust accounts. That's going to help them grow their retirement accounts. And honestly, I think they're right.

Like, frankly, I if I were them, I'd be ramping up these gold card invites. I would almost go, "All right, boys and girls, whoever wants a gold card, you could have it." Okay? And you know what?

You get your 3% cash back as long as you buy the dip once once a month.

Dude, you'd get people opening this damn app all the freaking time. Now, there are probably some compliance reasons as to why you can't tell people to buy the dip. You know, I I suppose you could say do something, you know, fund a little bit towards your stock or brokerage account. I don't know. I'm sure you can figure it out.

But the point is, you know, the stock really seems disappointed right now because of the miss and monthly active users and the decline in crypto revenue, which is down again year-over-year. Although it did beat expectations.

The interesting thing to know about Hood, though, is it tends to, and we'll look at the valuation here, too. It tends to align, at least in my opinion, with the Bitcoin cycle.

Uh we in our course member live streams got really excited about this at $69, and we really pitched this. We were sitting at $69 for a few days. We sat in the low70s for a few weeks. We were really bullish on Robin Hood then.

And then what happened is what really lifted Hood. I mean, I'm not trying to take credit away from Hood, but what really lifted Hood was the Bitcoin cycle. As soon as Bitcoin rockets, man, Robin Hood tends to do well because it's just a high margin place for uh Robin Hood to crank income, frankly.

Uh and so you know in addition to the World Cup and prediction markets when Bitcoin finally came out of this little winter territory around 60,000 over here and we've now been rubber rubber banding around this 80,000 line that's what hood was doing well.

Problem is you know we're kind of seeing that slowdown again and Bitcoin and it's a drag a little bit again. So we're kind of dragging right down with it. I think that creates opportunities especially if we can get back down into the 70s or 69.

It's obviously disappointing for anybody who's a long-term investor because I think what the company is doing is great, but it's not really trading for like a huge sexy discount right now. Not like what SoFi was.

The discount that we have right now on Robin Hood is maybe 5 to 10%. I think it's pretty close.

But anyway, going back to the actual financials here on Hood, you've got right now a PEG ratio of roughly about two. So price earnings growth ratio of about two. Markets are expecting that they're going to grow at 20% per year.

I actually think that's a little bit low. I think you could end up pushing growth here substantially if you pulled the right initiatives and really hit people at the right timing. I think they could do it.

Now that makes me bullish on Hood. Would I want to buy him at a toupe or wait? Honestly, with the momentum right now and where Bitcoin is, until there's a deal on Iran and or Bitcoin rallies, because if there's a deal on Iran, I think Bitcoin will skyrocket up to $102,000 really well, really quickly.

And if Robin Hood lags on that, you'd want to be sort of in that cycle.

Not personalized financial advice, of course, but that makes me pretty excited. Right now, we're just sort of in a little bit of a down momentum uh argument. And there's also a bit of a margin warning that Bank of America came out with.

Now, you know, I I think they're being a little extreme on this, but CNBC is reporting that Bank of America is reporting, that's a mouthful, that margin debt growth has slowed sharply in the stock market and this is creating warning signs in the market.

Apparently, uh, FINRA margin data has grown at a slower pace and they're basically saying, "Hey, we're growing slower than we did in May." And I'm thinking to myself, bro, no SH9T, man.

Dude, everybody was buying stocks in April after we got a deal, man. It was just like April of last year, you know? It was like after liberation. Things got so cheap. It's like, let's go party.

Come on, Bobby. Let's go party. Everybody was pulling out margin out of every freaking orphice they could get their hands on and that's how we ended up getting Leo fold. So of course margin debt growth is slower after we got Leo fold getting publicly executed basically and then he goes yolos into options with the leftover money that he has and he's probably already gotten hosed on that again.

People are learning lessons that debt is not that great in a volatile market.

But anyway, if you look at the peak of May of 2026, it's not as high as some of these prior peaks that we've seen during March of 2000 or 2007. I actually think we're probably closer to somewhere in these mid cycle rallies, not some form of permanent peak that's going to end up dumping us into a recession.

Obviously, that could be a contributor to Robin Hood's performance as well, though, because if people think the market's going to go down, well, guess what? Fewer people are going to trade stocks.

That's the way it is. Like, you know, we notice on really red days in the market, fewer people uh are interested in uh you know, being involved in the stock market. More people want to know what's going on, like what the hell is happening, but fewer people are actually interested in buying because there's real fear.

That means people just aren't even opening up their Robin Hood app. That could be one of the problems, too.

You know, market's going down for too long. People don't want to open the app. They don't want to look. They're kind of like monkey see no evil. I don't know. I think they do great when Bitcoin rallies.

Until then, they've really got to prove that they can grow out these margins on prediction markets.

And there is a lot of competition for the prediction markets. Uh like if I was going to name a prediction market that I thought was a great prediction market, I personally use it as well and I find they're great.

Well, that might be Khi. So Koshi, you got a little banner here. They are a sponsor of the channel, uh the sponsor of the startup. Uh, you get a free $25 when you sign up for Koshi at meettokevin.com/prediction.

You can also scan the QR code. You get $25 when you make your first trade.

But there's a lot of competition for these prediction markets. It's not just Robin Hood. And I know Robin Hood wants in the game, but there's, you know, Robin Hood's probably going to have to step up their marketing if they really want to grow the prediction game and get people into the app.

And that's I think exactly what they're doing with their credit card is, hey, maybe we can loss lead people in because we can't loss people in lead people in with crypto right now because it's just not as exciting.

So, let's get them in on banking or let's get them in on Roths or trust accounts because people focus on their retirement accounts a little bit more at the end of the year. Those things unfortunately just don't drive that much sexy growth, if you will.

I mean, headline transactionbased revenue at Robin Hood was up 19% year-over-year, which is great. But, you know, people aren't jumping up and down about that. You know, people are excited about these other revenues going up right here.

These other revenues, this is where we're going to see some more of these new market revenues. Prediction markets up 61%. That's great.

So, my only guess, because overall, these numbers aren't bad. My overall guess here is in terms of why Robin Hood's down is just the user numbers. You you because where you're making money, you're doing well.

Uh you are in fairness spending a little bit more proportionately. Those could be your loss leaders. But overall balance sheets in a great spot.

Uh if we go take a look at uh some of these here, let's do it together. So we've got securities, loans, payables to users. Let's call it 122 24. I got receivables and cash set aside.

That works out to about 23. So those are almost washed. These are your consu customer bases right here. Almost washed right here. Fractional gets washed with this, which means we really have bills of about $1.3 billion.

Uh we'll highlight that right here. So these are your bills and okay, we're just highlighting single digits, I guess, here. And then here's your cash. You got plenty of freaking cash at the company, which is fantastic.

So, overall, balance sheets's good, cash flows there. We've got revenues that are growing, maybe not as much as historically because crypto is a little bit slower, but the prediction market side's coming in.

Just got competition. You need more reasons to get people to the app. And that is kind of a more mature growth phase for a company like Robin Hood. That's why sometimes growth can slow down at companies like this on the stock because that's that momentum that forward momentum slows and the stock market doesn't like that.

Taking a look again at this margin debt piece here. Some would argue that this decline in margin debt is also bad for uh Robin Hood because if people are taking out uh less debt then maybe they're borrowing less and they're paying less interest to Robin Hood.

We did see net interest paid actually go down as well right here. net interest revenue down 9% year-over-year. Interesting.

Now, uh if we jump on over here, we can see margin debt remains near its record. These are nominal numbers. So, rather than growth rates, these are nominal numbers of margin debt.

You can see we did have that drop in liquidations, but we just haven't grown past that yet. I think there's a lot of nervousness because of Iran and the election and otherwise.

Really good shot though that hey, who knows? elections done, Fed's done after tomorrow, and we end up maybe getting a deal one of these days. Yeah, things could end up doing pretty well for Robin Hood.

Bank of America sees other market signs though, including higher credit spreads, high on high yields. So, we talked about credit spreads this morning. We actually think they have peaked out, which is actually bullish for the market.

When the market goes bullish, a hood tends to go bullish.

Bank of America also says there's a rotation towards defensives and healthc care. Well, like defensives and healthcare. And the problem with that is that you might end up seeing those as bubble signs.

I that's what they're arguing. I think this is a little looney cooney here. Uh these dynamics provide further evidence that the market continue to move [music] towards a more bubble-like state.

But in a place like that, if people think there's going to be some kind of poopy dupy in the market, then obviously a brokerage isn't going to do super well like Robin Hood.

So anyway, I think there are opportunities there. Uh I would probably wait for a lower price on Robin Hood, but that's my [music] take.