$HOOD · Everything Money · 2026-11-02

Now, we move on to Robinhood, the popular app that was famous for free stock trading, and which now offers cryptocurrencies, options, retirement accounts and even banking services.

Its stock has fallen by about 16% this year, and to be fair, the positive outlook is now real.

Robinhood aims to evolve from a simple trading app into a fully integrated financial center for its users, adding banking services, credit cards, and retirement products that keep customers for longer and provide them with more stable and reliable funds.

It has also attracted millions of gold members and targets young investors early on. The idea is that someone who opens an account at age 25 may remain a customer until age 60.

The more financial transactions you have that are linked to the Robinhood platform, the stronger your relationship with it becomes.

But here's the downside, and why analysts put it on the sell list. Robinhood still relies heavily on trading, especially high-risk trades such as options, cryptocurrencies, and betting markets.

When markets become dull or scary, people trade less, and Robin Hood's income may fluctuate wildly from quarter to quarter without warning. With the constant threat of new regulations for these products, you end up with a very volatile business.

So, when you add to that a business with such sharp fluctuations, it becomes very difficult to evaluate because you never know how it would perform under normal circumstances.

But remember, a volatile business may be a good buying opportunity at the right price, and an excellent business may be a bad buying opportunity at the wrong price. So, let's see what the numbers say about Robin Hood.

I will present it here on our program. I think the arrow symbol is Hood. Yes, the market capitalization is $87 billion, and the value of the company is $118 billion.

Okay guys, some other things. The return on capital is excellent, 28% last year, but only 2.28% over 5 years. Guys, that's a high price. It is sold at a price of P.

Now, here's the thing about the price of P. If we look at this, we find that their annual net income is $2.07 billion , while their annual free cash flow is only $219 million. We need to understand the reason for this huge difference.

That's a huge difference. Let's use artificial intelligence and ask: "Why is the net income for the past 12 months so much higher than the free cash flow?" This will tell me why.

Because I always think this is a warning sign for me.

Let's use artificial intelligence and ask: " Why is the net income for the past 12 months so much higher than the free cash flow?" But what is interesting is that their free cash flow over five years was 630 million, while their net income over five years was only 180 million.

That is, their average free cash flow over the past five years far exceeds their average net income.

Now, folks, one of the biggest advantages of this company is its gross profit margin of 81%. This means that 81% of every deal, every transaction that takes place, goes to net profit.

And look at this revenue growth : 24% annually over the past five years. In fact, it has been even higher in the last three years , reaching 43.5% annually. This company is growing at an accelerated pace.

I wonder how many customers she has . Let's find out. How many Robinhood accounts have customers annually, going back to 2021? I want to see how their customer base has grown over the past five years .

This will tell me whether growth is slowing down or speeding up?

But I want to remind everyone that Robinhood is where many people go to gamble when it comes to investing. It is not a real investment, it is speculation. So, I'm really surprised by this.

I thought it would be higher. 22.7, 23 million, 23.4, 25.2, 27 million dollars.

Now, what is the average account size? This will tell me, okay, is the account size growing? Is it because of the bull market? Is it because people are adding money?

These are assumptions. We can't get the exact number, but we can look at it and say, "Okay, what metrics are going on here?" Using the latest figures released by Robinhood, I found $384 billion in the platform's total assets .

Therefore, the average is about $13,400 per funded client.

Okay, can you tell me the average size by year going back to 2021? So, the system now tells me, as of August 31, that the average return per funded customer is 13,400.

I am now trying to find out the annual average by looking back to 2021, because the market has risen since then , almost tripling in size. Wow! Look at this. It dropped from 4,300 to 2,700.

This explains why a bear market occurred in 2022. It then returned to 4,300, then 7,600, then 11,930, and recently reached 13,400.

Therefore, it is likely that these people are investing in riskier assets. Therefore , I believe that in the event of a bear market, the value of the funds will decrease even further.

Now, let's take a look at the eight pillars here. The situation is bad. The total debt has decreased, as we mentioned earlier. I think it's a little higher than that. Well, we have a high price-to- free cash flow ratio, a high price-to-earnings ratio, and a poor return on capital for 5 years, but the first year's performance is good.

The number of outstanding shares has increased . So, they are issuing shares, and I don't like that , but it happens. However, their revenues, cash flows, and profits increased.

Let's take a look at the analysts' estimates. I don't think they are very optimistic about the future. The share price is expected to rise from 220 to 444, then fall to 375 in 2030, and revenues are expected to grow from 5.3 billion to 9.14 billion. Good.

Let's move on to the stock analysis tool and make our assumptions. Now, folks, I'd like to repeat: it's very difficult for new companies, especially companies like Robin Hood. I'm sure there are many people who follow us and have accounts on Robin Hood.

Investors in Robin Hood tend to speculate . Therefore, if a bear market occurs , they will be severely affected. Therefore, I will be a little more reserved.

It projected revenue growth of 5%, 9%, and 14% over the next ten years. It predicted profit margins of 20%, 30%, and 40%. Guys, I still think this is too much.

However, with a gross profit margin of 81%, and with increased invested funds and more transactions, this figure may rise. They achieved 42 % last year. But again, if we are experiencing a bear market, I have to assume that we will experience some kind of bear market over the next ten years.

This period may last longer than people would like, and may discourage some from investing for a while.

After that, the price-to-earnings ratio was set at 15%, 18%, and 21%. Then I set the market return at 9.5%. Now, let's begin the analysis. The stock price is currently $95. I have a low price of 19, a high price of around 92, and an average price of 42.

So , for me, I have to wait. Frankly, I need to do more research on Robinhood to understand its financial data, how it acquires customers, the cost of acquiring them, and the significant difference between profit and free cash flow. I need to understand that more deeply .

In fact, I agree with the analysts here about selling Robinhood.