HOOD · Research with Graham

Steve Yeow · HOOD · 2026-09-29

called since 70+

Graham · HOOD

Robinhood is showing strong revenue growth and profitability, driven by increased trading activity and successful diversification into new products. The current price of $116.50 appears to be factoring in continued high growth and successful expansion into these new business lines, implying a significant growth multiple.

Robinhood Markets, Inc. operates a financial services platform offering commission-free trading and a growing suite of financial products.

In the latest quarter, Q2 2026, Robinhood reported total net revenue of $1.31 billion, up 32% year-over-year. Net income was $561 million, and diluted EPS was $0.62. These figures include a one-time gain of $129 million ($0.14 EPS) primarily from the deconsolidation of Robinhood Ventures Fund I. Excluding this gain, adjusted net income would be $432 million, and adjusted EPS would be $0.48. Despite this adjustment, the underlying business showed strong growth. Net Deposits reached a record $22 billion, and Robinhood Gold Subscribers grew 39% year-over-year to 4.8 million.

By product line: Transaction-based revenues were $776 million, up 44% year-over-year. This was primarily driven by event contracts revenue of $156 million (up over 10x), options revenue of $342 million (up 29%), and equities revenue of $129 million (up 95%). Cryptocurrencies revenue, however, was $100 million, down 38%. Net interest revenues increased 9% year-over-year to $389 million, driven by growth in interest-earning assets. Other revenues increased 54% year-over-year to $143 million, primarily due to Trump Account service revenues and increased Robinhood Gold subscription revenues.

The company highlighted that 13 business lines have now reached $100 million or more in annualized revenues, including Robinhood Legend and the Credit Card business. The Credit Card business grew to over $100 million in annualized revenues, with the Gold Card reaching 1 million customers and $17 billion in annualized purchase volume. The "Trump Accounts" program, launched in July, has already seen over 7 million sign-ups and nearly $1.5 billion deposited.

Based on the adjusted Q2 2026 EPS of $0.48, and annualizing this to $1.92, the current price of $116.50 implies a P/E ratio of approximately 60.78. This valuation suggests the market is pricing in substantial future growth from the rapid scaling of newer initiatives like event contracts, the credit card business, and the Trump Accounts program, as well as continued expansion of its core trading and interest-earning assets.

What would change my mind: A sustained deceleration in transaction-based revenue growth, particularly in options and event contracts, or a significant slowdown in Net Deposits and Robinhood Gold subscriber additions would indicate that the market's growth expectations are not being met. Conversely, continued strong growth in these key metrics and clear evidence of profitability scaling from the newer business lines would reinforce the current valuation.

The next thing worth watching is the Q3 2026 earnings report, specifically the detailed revenue contributions and profitability trends of the rapidly expanding new business lines.