Robinhood Stock Surges 147% YTD — What’s Next?

$Robinhood(HOOD)$

Robinhood (HOOD) stock has staged an impressive rally in 2025, soaring more than 147% year-to-date. This surge reflects renewed investor optimism, a rebound in growth stocks, and a crypto-fueled bull market. But the sharp rally also raises important questions about whether the stock is now too expensive, and whether investors should still consider it a buy, hold, or sell at current levels.

In this extended analysis, I’ll walk through how Robinhood has performed recently, why my own rating has changed multiple times over the past two years, and why I believe patience is warranted at this juncture.

Why My Ratings on Robinhood Have Fluctuated

Over the last two years, my recommendation on Robinhood has not been static. I’ve moved the stock from a buy to a hold, back to buy, and again to hold.

That may sound indecisive, but the reality is that Robinhood has been one of the most volatile names in my coverage universe — and much of that volatility has been tied to shifts in the macroeconomic environment and investor sentiment.

This is a company whose performance is highly correlated to how optimistic consumers and investors feel about the future. When sentiment is strong and speculative appetite is high — as we’ve seen so far this year — Robinhood benefits immensely. Conversely, when sentiment weakens, as it did in late 2022, Robinhood can fall out of favor very quickly.

To illustrate, during the market downturn of 2022, as inflation spiked and investors grew more risk-averse, Robinhood’s stock price suffered significantly. But now, the mood has shifted again: growth stocks are leading the way, cryptocurrencies have come roaring back, and Robinhood is once again thriving.

It’s precisely this cyclical, sentiment-driven nature that has made the stock such a challenging one to recommend consistently.

Staying Disciplined — Even When It’s Unpopular

As many of you know, I evaluate companies using a six-step proprietary process, which I’ve detailed in my book on investing. This framework helps keep me grounded, even when emotions run high in the markets.

On April 30, 2025, after Robinhood reported a strong Q1, I updated my rating to hold. Since then, the stock has surged further — and yes, that means I missed out on a portion of this run-up by not upgrading to buy.

But that’s okay. My philosophy has always been that investing is a process, not a prediction game. No system is perfect, and no one catches every rally. What matters is that over time, the process delivers consistent, risk-adjusted returns.

That’s why I always track the performance of my recommendations, transparently report when I miss a call, and use those results to refine my own decision-making. I have no illusions about having “special” stock-picking powers. Instead, I focus on applying a sound, repeatable framework to evaluate businesses and valuations objectively — even when the market is euphoric.

Highlights From Q1: Growth Returns in Force

On April 30, Robinhood reported strong first-quarter results that exceeded expectations. The company has clearly regained momentum in several key areas.

Notable highlights from the quarter include:

• Revenue growth of 50% year-over-year.

• Earnings per share more than doubled.

• Continued product innovation, with the launch of Robinhood Strategies, Banking, and Cortex.

• An additional $500 million share repurchase authorization, signaling confidence from management.

I’m particularly encouraged by the share buybacks. When management uses free cash flow to repurchase stock, it demonstrates that they view their shares as undervalued — a positive signal for long-term investors.

Transaction-based revenue rose 77% to $583 million, with cryptocurrency-related revenue more than doubling to $252 million. That’s not surprising given the current administration’s pro-crypto stance, which has fueled a broad rally in digital assets and boosted trading activity.

That said, I always caution investors about relying too heavily on favorable government policy. Political winds can shift quickly. Just as we’ve seen with the electric vehicle sector — where tax credits and subsidies were rolled back under the current administration — the next government could take a less friendly view of crypto.

So while Robinhood is benefiting from a favorable regulatory environment today, that may not last forever.

Customer Growth Remains Robust

Beyond the headline financial results, Robinhood’s customer metrics were also encouraging. The company grew its base of funded accounts by 1.9 million year-over-year, reaching 25.8 million. Investment accounts rose by 2.6 million, up 11% year-over-year, to 27 million.

This growth is being driven not just by attracting new customers, but also by increasing engagement and revenue per customer — a healthy sign of platform maturity.

Robinhood’s total platform assets have climbed meaningfully, boosted by customer deposits as well as market-driven gains in equities and crypto holdings. As of May 2025, funded accounts had increased to 25.9 million, up 1.8 million year-over-year.

As someone who has worked in the investment industry for many years, I’m always encouraged to see more people participating in the markets and building wealth over time. Investing remains one of the most powerful tools for financial independence, and Robinhood has undoubtedly played a role in making markets more accessible.

A Few Red Flags to Watch

Despite all the positives, there are a few areas of concern that investors should keep in mind.

One key metric I monitor closely is return on invested capital (ROIC). According to fiscal.ai — one of my go-to data sources — Robinhood’s ROIC improved significantly in recent years, rising from -28% to 12.6%.

However, in the most recent trailing 12 months, ROIC slipped back down to 6.1%. That’s concerning, especially for a stock trading at premium valuations. For high-multiple stocks, I like to see ROIC trending up, not down.

Speaking of valuations, Robinhood currently trades at its highest level since early 2024. Its forward P/E ratio is around 75x, which is rich by almost any standard. My own discounted cash flow (DCF) analysis estimates the stock’s intrinsic value at about $38 per share — well below the current market price of over $92 per share.

By both DCF and earnings multiples, the stock looks expensive.

Key Insights for Investors

Here are the most important takeaways from my latest review of Robinhood:

1. The stock has soared in 2025. Up more than 147% year-to-date, Robinhood has been one of the standout growth stories this year.

2. My rating has changed several times. The stock’s volatility and cyclical nature have led me to shift between buy and hold at different points.

3. Q1 was strong. The company posted 50% revenue growth, over 100% EPS growth, and rolled out several innovative products.

4. Customer growth is solid. Both funded accounts and engagement levels continue to climb, contributing to higher revenue per user.

5. ROIC has declined. After years of improvement, return on invested capital dropped to 6.1% in the latest 12 months — a potential warning sign.

6. Valuation is stretched. Both my DCF and traditional metrics suggest the stock is overvalued at current levels.

7. Government policy is a wild card. Today’s pro-crypto stance has helped Robinhood, but future administrations could reverse course.

8. Management is shareholder-friendly. The company continues to return capital via buybacks, which is encouraging.

9. Investing is a process. Even though I missed part of the rally, I’m committed to my disciplined framework over chasing short-term gains.

Final Verdict: Still a Hold

Robinhood is making excellent progress across several dimensions — product innovation, customer acquisition, engagement, and revenue growth. Management is proactive and aligned with shareholders, and the company is clearly benefiting from the current bull market in growth stocks and crypto.

However, at today’s elevated valuation, the stock looks too expensive for my taste. Both fundamental metrics and my valuation models suggest caution.

That’s why I am maintaining my hold rating, just as I did in April. I believe Robinhood is a high-quality company with strong long-term potential — but at a lower price, it would offer a better risk/reward profile.

For now, patience is warranted. I’ll continue to monitor the stock closely and update my view if the valuation becomes more attractive or if the fundamentals change materially.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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