$HOOD · The Motley Fool · 2026-10-28

One that I did want to talk about uh in the market's reaction stock was down about 6% as the market opened is Robin Hood. Um and this is I do you own shares of Robin Hood?

>> I I also own shares of Robin Hood. But the big concern for me, this this should be a growth company, especially if you're paying the kind of multiple that they're trading for.

This funded customer growth of just 340,000 customers quarter over-arter is pretty anemic.

Those members are adding more and more products. You know we're seeing the same that same trend with Robin Hood. They're monetizing a little bit better but the fact that their user numbers are not growing very quickly is a big concern.

The net deposits also not going up kind of makes sense in the current economy. People who especially younger people who are the cohorts that Robin Hood tends to attract aren't, you know, making as much excess cash that they're going to be able to invest in the market as maybe others would.

There are a few positives. Uh I love seeing that the retirement numbers continue to go up into the an extremely rapid rate. This is a product that didn't even exist a couple of years ago.

Uh so great that they're, you know, they've got custodial accounts now. I've got all of these things uh in my Robin Hood accounts and I think it's a great user experience.

But that said, they've also been generating a lot of their revenue uh from things like prediction markets. And so one of the concerns that I have too is what are they really focused on and how are they really focused on growing?

Are they focused on growing in sort of the long-term right ways in the way that I I see them or are they focused on this gambling effectively with the prediction markets? That's the hot thing right now.

You know, some of these companies that are still private poly the poly markets of the world, some of them are getting to a valuation that is approaching even even Robin Hoods. Uh, so I get why they're kind of going after some of those markets, but I just don't think that's necessarily where you're going to build the long-term business.

You want people who are going to adopt your credit card, who are going to be investing in stocks long term, who are, you know, not necessarily like we we saw what happened with day traders, uh, with the with, you know, 2020, 2021, they grew like crazy and then suddenly the floor fell out.

Uh, I'm not saying that that's going to happen again, but that's where the valuation is a bit more of a concern today.

What would you what do you think looking at the numbers? I'll just say that they are I would say lucky because they they planned for it but without prediction markets I think this would have been a way worse report not just this quarter but for the last couple of quarters cuz crypto has gone down substantially for them and prediction market just picked up what crypto left

and so it's you can dislike prediction markets that's fine but I don't think It's you anyone can tell me that it's not a good business to have at the moment because it's I mean it's a t it is a thriving business so it's definitely helping them

then the fact that again Robin Hood is a cyclical business that there's no as of right now there's just no way around it market goes down it's not that great for Robin Hood market goes up it's better for Robin Hood but they are diversifying away retirement accounts things like that credit cards so they are diversifying to become a more stable business over the long term but still I I do still this is still going to be viewed as a cyclical business purely because it is exposed to the market's fluctuation so this is something that we we need to know

but yeah the the funded accounts thing is is is a worry that I had already last last quarter

and by the way the jump last quarter was related to an acquisition that they made I think that was the bits when bit stamp uh started to be consolidated uh so if if you go back to that chart there was a nice jump last quarter but it was not organic.

Yeah. So this is something I guess that they have to work on. We already know that they are expanding internationally through tokenized uh products and things like that. So naturally it should be it should be growing but it's definitely not in growth mode like two years ago.

So it's still a good business. still think they do well long term but there are certainly couple of things where shareholders need to pay attention to.

Yeah, here's the other thing I wanted to highlight. Uh because net interest revenue over the last few years has been just a huge driver of the business and this is the kind of this is the kind of thing I want to see growing because it's a more stable business than options trading and crypto trading which you talked about earlier uh has kind of fallen through the floor.

But here again revenue is actually down year-over-year. And the the concern here for me is margin interest. So, the amount of margin that the customers on Robin Hood are using is going is exploding.

Now, that's part part of the reason this is going up is because interest rates are up. Uh, and these margin rates are going to be tied to interest rates. So, put that caveat in there.

But again, if we do have a pullback, if there's a was it 2022 style pullback, if heaven forbid this is a bubble and we have a 2008 style or 2007, 2008 or 2000 to 2003 style pullback, this some of these things can disappear pretty quickly.

Um, so just just some things that I think the market is probably thinking a little bit more about today than they were a couple of quarters ago. Um, you know, I I like you, I still think this is a good business long term, but we're seeing today that it it could be pretty choppy.

Uh, all right. Any final thoughts on Robin Hood before let's we should touch on uh anthropic before we get too far. Yeah. So, what I noted a couple of things. So, gold subscribers actually went up 34% which is good.

Again, subscriptions that's fine. They did also say that October deposits is already above $13 billion. So, compare that to to the number that we've just seen. That's already a a nice jump, but it does include a $6 billion um $6 billion from the Dell family for the uh Trump accounts.

So, that's included in that. But, I mean, it's still it's still money coming in. So, that that's fine for for the business.

Now, we'll see. We'll see what happens, especially if the focus maybe shouldn't be purely on on funded accounts, but it is a very very important number for uh the long-term future of this business, which look, management definitely knows right now what they should be doing.

So, yeah, is it a buy the deep moment? I don't know. But, uh we'll see how Q4 uh evolves because we do get monthly metrics. So, at least we know how how the the quarter is going to look like.

The other thing that I just want to put out there is I would love for them to spend more time, you know, growing growing the business, figuring out how to add more members rather than putting on these these silly events that are just seem like lighting money on fire.

Nobody's nobody's adopting a Robin Hood product because, you know, Vlad is in a a like flight suit.

>> Yeah. Pilot suit, whatever that one is was a few months ago. It just it I don't like those. I think those are the kinds of things that are when your stock is going up and to the right, it's it's super fun, but it doesn't drive the business.

And right now, we're at the point where they need to they need to drive the business.