Introduction:
In the 24-hour sleepless trading frenzy of the crypto market, a name is being mentioned by more and more investors - Robinhood. This fintech platform founded by two Stanford students not only leveraged traditional Wall Street with a zero-commission model, but also created a new world in the crypto field.
When Baiju Bhatt and Vlad Tenev persisted in their dreams after 75 financing failures, they may not have imagined that Robinhood would eventually become a key bridge connecting traditional finance with cryptoassets.
RockFlow has previously provided detailed introductions to Robinhood's past development history, GME events, and order flow payment (PFOF). In this article, RockFlow's investment research team will delve into the core of its crypto business, explore the reasons for its stock price surge of 383% in the past year, and analyze its current investment value and future bullish catalysts in detail.
1. Three waves of growth have laid the groundwork for the rise of encryption
The unexpected development of Robinhood's encryption business is not accidental. Three revolutionary waves have gradually built a strong user base and product innovation capabilities, laying a solid foundation for its later takeoff in the encryption business.
Robinhood initially entered the market with a zero commission model, breaking the commission barrier of traditional securities firms of $8-10. By canceling the minimum deposit requirement and supporting fragmented stock trading, it successfully attracted a large number of young users and established their initial trust in the platform. This has accumulated a valuable user base for expanding innovative businesses such as encryption in the future.
In the second wave of growth, Robinhood demonstrated outstanding product innovation capabilities. By incorporating gamification elements into the trading experience, creating a simple and intuitive interface design, and combining it with an attractive stock reward mechanism, the platform achieved amazing growth. During this period, the trading volume reached 9 times that of E-Trade, and the trading volume of option contracts reached 88 times that of Jiaxin Wealth Management, proving its strong technical strength and Operation Product ability. These abilities were later successfully applied to the development of encrypted trading products.
In the third wave of growth, Robinhood played a core role in the Meme stock and crypto frenzy. The platform became the main battlefield for trading popular stocks such as GameStop and AMC, as well as cryptocurrencies such as Dogecoin. In January 2021, it set a record for the number of new accounts opened in a single month exceeding the total of all other securities firms. This period not only brought a large number of active users, but more importantly, cultivated users' investment habits in emerging asset classes.
Robinhood's three revolutionary waves of user growth not only changed the landscape of the securities industry, but also reshaped the entire investment culture. Under its influence, retail investors have risen to account for 20% of all trading volume. The younger generation has begun to view investment as part of their lifestyle, and this concept has created a favorable environment for the popularization of innovative financial products such as crypto.
These accumulated advantages - a huge user base, strong technical capabilities, mature operational experience, and profound influence on investment culture - together constitute the cornerstone of Robinhood's success in the crypto field.
2. Crypto revenue continues to skyrocket, driving Robinhood's stock price to double
With the gradual recovery of the crypto market since 2023, Robinhood has also benefited from it. In its recent quarterly financial reports, the proportion of crypto revenue has gradually increased. The following chart shows Robinhood's revenue situation in the past 9 quarters, with particularly notable increases in option revenue and crypto revenue.
Taking the recently released Q3 2024 financial report as an example, crypto revenue surged 165% YoY to $61 million, demonstrating an amazing growth momentum. This achievement not only confirms the company's strategic vision in the crypto field, but also demonstrates its excellent execution in the process of business expansion.
Robinhood's revenue mainly comes from three sectors: trading revenue, net interest income, and other income. Among them, trading revenue increased by 72% year-on-year to reach $319 million, while the crypto business became one of the most dazzling sectors with a year-on-year growth rate of 165%. This achievement, together with options trading revenue ($202 million), constitutes the dual engines of the company's revenue growth.
Robinhood has not ignored the robustness of the business while growing rapidly. Net interest income increased by 9% year-on-year to $274 million, providing the company with stable cash flow. Innovative services such as Gold subscriptions drove other revenue growth by 42% to $44 million, and 2.20 million's premium client base proves users' recognition of platform services.
In addition, the platform achieved a net deposit of over 10 billion USD for the third consecutive quarter, highlighting the high level of trust users have in Robinhood. This trust not only supports the development of traditional businesses, but also provides a solid foundation for the expansion of innovative businesses such as crypto.
It is worth noting that while pursuing high-speed growth, Robinhood still maintains prudent cost control and expects full-year 2024 operating expenses to remain in the range of 18.5-19 50 million dollars. This strategy of balancing growth and efficiency provides a guarantee for the continuous development of innovative businesses such as encryption.
From this financial report, it is clear that Robinhood is gradually transforming from a traditional zero-commission trading platform to a comprehensive fintech platform with crypto as an important growth pole. The outstanding performance of its encryption business not only brings considerable revenue growth to the company, but also indicates its broad prospects in the new era of encryption.
3. Why is Robinhood still worth looking forward to in 2025?
Despite Robinhood's stock price having risen by 383% in the past year, the RockFlow investment research team is still optimistic about its performance in 2025 based on its unique market opportunities. This confidence largely comes from its active layout in the crypto field.
Robinhood's core client base is mainly concentrated among millennials and Generation Z, who happen to be the most active participants in crypto. As the wealth of the older generation transfers to the younger generation, these assets are likely to flow to platforms that better meet the investment needs of the new generation. As a bridge connecting traditional finance and crypto innovation, Robinhood will reap significant benefits from this wealth transfer.
In addition, Robinhood's international expansion strategy particularly emphasizes the importance of crypto business: European Union market: actively layout European Union crypto business, making it an important pivot for Internationalization; United Kingdom market: develop business in the City of London, laying the foundation for the future expansion of crypto services.
Finally, Robinhood has strengthened its crypto business competitiveness through various measures: for example, its futures trading infrastructure can provide technical support for future crypto derivatives trading; Gold membership services are expected to provide users with more crypto-related privileges; continuously optimized trading interfaces and services can also increase user participation in crypto trading.
Overall, Robinhood's crypto business development reflects a clear global mindset and innovation orientation. By integrating traditional finance and crypto services, the company is building a more inclusive financial ecosystem. Its layout in the European market, especially the expansion of crypto business, demonstrates the company's long-term development determination in the crypto field. With the continuous maturity of the global crypto market, Robinhood is expected to occupy a more important position in this rapidly developing field.
In terms of policy, after Trump officially takes office, his impact on the US stock market and the crypto industry will also become an important driving force for Robinhood's stock price to rise.
It is well known that the Trump administration has always advocated reducing financial regulation, which may further reduce compliance costs and simplify compliance processes. Financial technology companies like Robinhood that rely on flexible operations may benefit from more relaxed regulatory environments. If the crypto field continues to receive clear policy support (such as clear regulatory frameworks or relaxed restrictions), Robinhood's crypto business will continue to grow beyond expectations.
Secondly, although the new president has been in office for less than a month, the volatility he has brought to the market is significantly increasing. The market has already seen the implementation of tariff policies (and the subsequent delay) causing significant fluctuations in the US stock market. The exacerbated volatility of the stock market has a significant impact on the active level of retail trading, and Robinhood's trading volume and commission income may increase accordingly.
4. Conclusion
The RockFlow research team believes that Robinhood is showing remarkable growth potential: its core user group (millennials and Generation Z) is the most active participant in crypto and will benefit from the upcoming intergenerational wealth transfer; coupled with the improvement of trading infrastructure and innovation in Gold membership services, as well as the regulatory relaxation trend of Trump's new policies and the potential benefits of encryption, these measures will jointly promote Robinhood to occupy a more important position in the global crypto market.
Although Robinhood may face regulatory pressure and market volatility in the short term, in the long run, it is expected to become an important bridge connecting traditional finance with the future of encryption, and its investment value is worth long-term attention.
Author Profile:
The RockFlow research team has a long-term focus on high-quality companies in the US stock market, emerging markets such as Latin America and Southeast Asia, and high potential industries such as encryption and biotechnology. The core members of the team come from top technology companies and financial institutions such as Facebook, Baidu, ByteDance, Huawei, Goldman Sachs, CITIC Securities, etc. Most of them graduated from top universities such as Massachusetts Institute of Technology, University of California, Berkeley, Nanyang Technological Institute, Tsinghua University, and Fudan University.
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