Strong Growth, Steep Price: Is Robinhood Stock Still Attractive?

Robinhood Markets HOOD has evolved well beyond its roots as a commission-free stock-trading app. Strong customer engagement, record asset inflows, growing transaction volumes and rapid expansion across prediction markets, credit cards, banking, retirement and wealth management have created multiple growth avenues. This momentum was evident in the first half of 2026, when Robinhood posted record revenues and robust earnings growth.

Much of this optimism is reflected in the stock’s valuation. At $109.76 as of Aug. 27, Robinhood trades at 11.4X trailing 12-month tangible book, well above the industry average of 3.33X. 

Robinhood’s P/TB TTM
 

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Also, HOOD stock is expensive compared with its peers – Charles Schwab SCHW and Interactive Brokers IBKR. Schwab and Interactive Brokers have a trailing 12-month P/TB of 7.71X and 1.95X, respectively. 

Robinhood’s faster growth, younger customer base, digital-first platform and exposure to emerging businesses warrant some premium. Nevertheless, the gap leaves little room for disappointing execution. Investors considering the stock must therefore determine whether the company’s rapidly expanding financial ecosystem can generate enough sustained earnings growth to justify such a steep price.

Strong H1 Results Underpin HOOD’s Growth Story

Robinhood entered the second half of 2026 with substantial momentum. For the first six months of 2026, net revenues increased 24% year over year to a record $2.38 billion. Earnings per share rose nearly 27% to $1.00, while adjusted EBITDA grew 25% to $1.28 billion.

Quarterly Revenue Trend
 

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Trading remained a major growth engine. Transaction-based revenues rose 25% to $1.4 billion. Options revenues increased 19% year over year to $602 million, while equities revenues jumped 73% to $211 million. Prediction-market event contracts emerged as a key growth driver, generating $260 million in revenues compared with just $13 million in the prior-year period. The weak spot was cryptocurrencies, where revenues declined 43% to $234 million.

Importantly, Robinhood's expansion is no longer solely a trading-volume story. As of June 30, 2026, funded customers increased 7% year over year to 28.4 million, Gold subscribers surged 39% to a record 4.8 million and average revenue per user climbed 24% to $187. Total Platform Assets advanced 32% to $369 billion, while Robinhood recorded net deposits of approximately $39.7 billion in the first six months of 2026, including $21.7 billion in the second quarter alone, highlighting sustained customer asset inflows.

Momentum continued into July. Funded customers edged up to 28.5 million, while trailing-12-month net deposits reached $74.9 billion, representing 25% growth rate relative to July 2025 Platform Assets. Such consistent organic inflows indicate that Robinhood is capturing a larger share of customers’ investable assets.

New Businesses Broaden Robinhood’s Growth Runway

Another reason investors have assigned HOOD a premium valuation is its expanding product ecosystem. 

The company now says 13 business lines have reached at least $100 million in annualized revenues. Its Gold Card has crossed 1 million customers, Robinhood Banking held more than $3 billion in deposits at the end of the quarter and Robinhood Strategies had attracted more than 300,000 funded customers and nearly $2 billion in assets. TradePMR's platform had reached $50 billion in assets under management.

Internationally, Robinhood surpassed 1 million funded customers outside the United States and completed its WonderFi acquisition in Canada during the second quarter. Robinhood Singapore received a capital markets services license on July 1, while Robinhood U.K. entered the FCA cryptoasset register on July 31 and launched crypto trading earlier this month. Robinhood Chain also moved to a public mainnet in July, and by Aug. 10, 2026, it had generated more than $18 billion in decentralized-exchange volume and exceeded $840 million in total value locked. 

Stock Tokens are available to eligible users in more than 120 countries, while Robinhood Earn had attracted more than $200 million in deposits by July-end. These initiatives broaden Robinhood's geographic reach and crypto use cases. If Robinhood can successfully cross-sell these services, higher customer lifetime values and more recurring revenues could support long-term margin expansion.

Likewise, Interactive Brokers and Schwab have been expanding their product suites aggressively. Interactive Brokers is broadening its product ecosystem beyond traditional stocks and options by expanding into crypto and crypto futures, prediction markets, AI-enabled trading tools and new international markets. This diversification strengthens client engagement while positioning IBKR as a multi-asset, global trading platform.

Meanwhile, Schwab is diversifying beyond brokerage into wealth management, advisory, banking, lending, retirement and asset management. SCHW’s fee-based assets, net interest income and broader financial services reduce commission dependence, support steadier revenues and deepen client relationships.

Robinhood’s Growth Prospects Remain Favorable

Robinhood’s long-term earnings picture remains compelling, although near-term growth is expected to moderate after substantial gains in recent years.

The Zacks Consensus Estimate for 2026 revenues is $5.08 billion, implying 13.7% year-over-year growth. On the other hand, earnings are projected to decline 0.5% to $2.04. However, growth is expected to accelerate next year, with revenues likely to jump 25.5% to $6.38 billion and earnings are projected to surge 31.2% to $2.69.

Earnings Estimates
 

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Asset growth, margin lending, prediction markets, Gold adoption, retirement assets, advisory services and international expansion offer meaningful upside to these estimates. Robinhood’s increasing scale could also generate operating leverage if revenues continue expanding faster than expenses.

Robinhood's liquidity position supports reinvestment, acquisitions and shareholder returns while management continues to manage share count. As of June 30, 2026, cash and cash equivalents were $5.4 billion, and corporate cash, investments and stablecoin totaled $5.6 billion. The company also had $4.9 billion of available lines of credit. In June, Robinhood raised $2.2 billion through 0% convertible senior notes due in October 2029. Thus, a solid liquidity position supports its capital distributions. 

Though the company doesn’t pay dividends, it has been actively engaged in share repurchases. In March, the board refreshed the share buyback authorization to $1.5 billion, which management expects to complete over roughly the next three years. As of June 30, 2026, roughly $1.37 billion worth of shares remained available for buyback. Given decent liquidity and balance sheet position, the company’s share repurchases will likely be sustainable.

Robinhood: Risks That Should Not Be Ignored

Robinhood remains exposed to trading volumes, cryptocurrency prices and broader investor sentiment. Crypto transaction revenues have been declining for the last few quarters, demonstrating the volatility inherent in this business.

Costs also warrant attention. Operating expenses increased to $1.39 billion in the first half from $1.11 billion. First-half provisions for credit losses climbed to $92 million from $52 million as Robinhood expanded its credit-card operations. 

Further, rapid expansion into prediction markets, cryptocurrencies, lending and international markets increases regulatory and execution risks. A slowdown in retail trading activity, weaker market conditions or regulatory restrictions on high-growth businesses could pressure revenues while simultaneously compressing Robinhood’s premium valuation.

Is Robinhood Stock Worth Betting on?

Following a solid performance in 2025, Robinhood shares have struggled this year and are down 3% amid the crypto-market downturn against the industry’s growth of 10.7%. Although robust equities, options and prediction market activities have partly cushioned the impact, crypto weakness continues to weigh on investor sentiment. 

Also, Robinhood shares have underperformed Schwab and Interactive Brokers over the same time frame. 

YTD Price Performance
 

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Robinhood’s underlying growth story remains compelling. Record revenues, robust net deposits, expanding customer assets and a rapidly diversifying product suite suggest that the company has considerable room to grow. New businesses such as prediction markets, Gold, banking, credit cards and advisory services could make revenues more diversified and strengthen customer retention.

However, the stock price already reflects substantial expectations. With HOOD trading at a premium, investors are paying today for considerable future growth. The company must therefore continue delivering strong asset inflows, successful product adoption and above-average earnings expansion to justify its premium.

For growth-oriented investors willing to tolerate considerable volatility, Robinhood remains an intriguing long-term story. However, given its elevated valuation and exposure to market, regulatory and execution risks, investors may find the risk-reward equation more compelling following a meaningful pullback rather than chasing the stock at current premium levels.

At present, HOOD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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