Author: Michael Nadeau, The Defi Report

Compiled by: Glendon, Techub News

In this market cycle, the standout performers are not the traditional tokens, but rather crypto stocks. Among them, Robinhood has shown the strongest performance. The stock has increased 17 times in less than two years, turning one of our most contrarian investments (the price of HOOD fell 80% from its IPO price in 2022) into a significant win for our portfolio.

We first bought shares of the company during the last bear market (with an average cost of $21.49) and sold out in October, ultimately locking in over 550% returns.

Currently, with the positive trend in product development and a more diversified revenue structure compared to two years ago, Robinhood has officially returned to the "watch list" (the investment alternative list we drafted during the bear market).

This report, released today, is a comprehensive update based on detailed data regarding the company's fundamentals, valuation, and its ambitious plans for deep expansion in the cryptocurrency and prediction market sectors.

Revenue and Revenue Growth

Data Source: Yahoo Finance, Robinhood

Robinhood expects its revenue to reach $2.95 billion in 2024, a 58% increase from 2023. As of the third quarter of this year, its revenue has already reached $3.19 billion, surpassing the total for the entire previous year.

In the past 12 months, the company's revenue has reached $4.2 billion (a 31% increase year-over-year).

Next, we will break down the revenue sources and growth of each business line.

Revenue Breakdown

Data Source: Robinhood 10 Q

Key Takeaways

Robinhood's revenue compound annual growth rate (CAGR) over the past five years is 34%. The company achieved a record net profit of $565 million in the third quarter (a 271% increase year-over-year).

The cryptocurrency business accounted for 21% of Robinhood's total revenue year-to-date (YTD), unchanged from last year.

Year-to-date, transaction-based revenue is $1.85 billion (up from $1.65 billion in the same period of 2024). Overall, transaction-based revenue accounts for 58% of total revenue (down from 77% in 2021).

This indicates: 1) Transaction-based revenue is growing (covering stocks, options, and cryptocurrencies); 2) Robinhood has been adding new revenue lines.

What are these new revenue lines? The prediction market (via Kalshi) has achieved an annualized revenue of $100 million, making it the fastest-growing business line in the company's history.

Robinhood Gold currently has 3.9 million paying users (paying $5 per month), generating annual subscription revenue of $234 million.

Instant withdrawal fees, futures market fees, and swap revenue (from Robinhood's credit card business) are included in "other revenue."

In addition to transaction-based revenue and new revenue lines, Robinhood has achieved over $1.1 billion in net interest income as of the third quarter (accounting for 35% of total revenue).

Transaction-Based Revenue

Key Takeaways

Options are Robinhood's "cash cow."

The cryptocurrency business ranks second, despite accounting for only 12% of stock trading volume.

This highlights the superior business model that Robinhood has adopted in the cryptocurrency trading space.

Stock trading volume accounts for 88% of total trading volume, but trading revenue only accounts for 7%.

Fundamentals

Users

As of September 30, 2025, Robinhood has 27.1 million paying users. The user growth rate over the past five years is 22.6%, with most growth occurring in 2020.

Valuation Comparison

Some Thoughts:

Super liquidity (malicious trading + spot trading) makes all platforms look small in terms of trading volume, but generates the least revenue.

Uniswap faces the biggest challenge in user monetization, as historically 100% of trading fees are paid to liquidity providers (this situation has changed somewhat with recent governance proposals).

Coinbase vs Robinhood

Coinbase's user base is only one-third that of Robinhood, yet its revenue is nearly double that of Robinhood. Meanwhile, Coinbase's trading price is 53% lower than Robinhood's based on market capitalization.

Why?

We believe the market favors Robinhood for the following reasons:

Business diversification, covering stocks, options, prediction markets, and cryptocurrencies.

The market positions Robinhood as a "super app" entering the consumer/retail finance space, while Coinbase is still viewed as a "cryptocurrency exchange" (despite its business being much broader).

Regulatory licensing: Robinhood is registered as a broker-dealer and is regulated by FINRA and the SEC. Coinbase does not have such qualifications, meaning it cannot offer services like stocks, options, margin loans, etc.

Robinhood has a larger and more active user base. However, since 2021, Coinbase's user growth has been sluggish.

Additionally, in terms of traditional financial platforms, Robinhood's revenue over the past twelve months accounts for 18% of Charles Schwab's. Charles Schwab has 38 million active accounts (compared to Robinhood's 27.1 million).

Product Roadmap (Cryptocurrency Direction)

A brief history of Robinhood's cryptocurrency business development.

2018

Robinhood officially launched cryptocurrency trading in some states, initially supporting Bitcoin and Ethereum trading.

2019

Robinhood obtained a BitLicense from New York State, allowing it to offer cryptocurrency trading services in New York.

2020

Robinhood's cryptocurrency trading volume saw significant growth, coinciding with a substantial increase in its user base—during the COVID-19 pandemic, retail investors reignited their interest in stock and cryptocurrency trading, driving the company's user expansion.

2021

Robinhood reported that cryptocurrency business revenue accounted for 41% in the first quarter, primarily due to Dogecoin trading (which accounted for 25% of total revenue). Later that year, Robinhood filed for an IPO, noting that cryptocurrency trading is an important part of its business.

2022

Robinhood announced plans to launch a cryptocurrency wallet feature, allowing users to deposit and withdraw crypto assets.

2023

Robinhood announced the addition of multiple cryptocurrencies for trading on its platform and plans to expand into the EU market.

2024

Robinhood announced a partnership with Arbitrum (Ethereum Layer 2) to allow users to trade cryptocurrencies through decentralized exchanges (DEX) on Arbitrum. Subsequently, the Robinhood team announced integration with MetaMask, enabling users to purchase cryptocurrencies on Robinhood and fund their wallets via debit cards, bank transfers, or existing funds in their Robinhood accounts.

The team then launched staking services for European customers, as well as a cryptocurrency trading API providing access to market data and programmatic order capabilities.

Acquisition of Bitstamp, a global cryptocurrency exchange with 4.4 million users and annual revenue of $200 million.

Support for Base (Coinbase's L2 project) has been launched.

Becoming the primary entry point for retail traders in cryptocurrency (covering more assets, wallet access, integrated services, and low fees).

2025

Complete integration of the Bitstamp exchange;

Release of Robinhood cryptocurrency wallet v2 (cross-chain swaps, DeFi connections, Arbitrum features, potential Base and Solana swaps, web3 wallet experience);

Awaiting approval for cryptocurrency staking services in the U.S.;

Providing institutional cryptocurrency services through Bitstamp;

Announcing plans to build an L2 link on Arbitrum;

Announcing plans to tokenize public and private equity (24/7 trading, instant settlement, integration with DeFi, global access for users outside the U.S., cost structure lower than traditional brokerage channels).

The last point marks the beginning of Robinhood's full-scale entry into the cryptocurrency space, leveraging its infrastructure (Bitstamp, Robinhood Crypto, Arbitrum) and user base to lay out in the following areas:

• Regulated global exchanges
• Custodial solutions with integrated staking features
• Tokenization and integration with DeFi
• Wallet and payment services
• Deposit/withdrawal channels
• What is the focus?

Robinhood is building a full-stack platform encompassing tokenization, cryptocurrency trading, and financial services.

Future Roadmap

Phase One (Ongoing)

The EU currently has nearly 800 tokenized listed stocks and is expanding into the private equity sector.

Trading is conducted solely through the Robinhood app (no external transfers).

Built on Arbitrum.

Phase Two (Early 2026)

Using Bitstamp will enable 24/7 trading, replicating the cryptocurrency trading model;

Achieving global access and continuous liquidity.

Phase Three (End of 2026?)

Tokenized stocks can be extracted and combined across DeFi platforms;

Users can use tokenized equity as collateral in DeFi (such as Aave);

Ultimate vision: fully permissionless, programmable assets that go beyond brokerage.

Why Choose Cryptocurrency?

Unlike the stock business (which Robinhood heavily relies on order flow payments), cryptocurrency trading adopts a completely different and more profitable profit model. Since the cryptocurrency market does not have an NBBO (National Best Bid and Offer), Robinhood does not need to sell order flow to market makers. Instead, it profits through spreads and routing revenue, earning the difference between the price it quotes to users and the price at which it obtains liquidity (through internal market makers or Bitstamp).

This means Robinhood has greater control over trading economics and can retain a higher revenue share from each cryptocurrency transaction. The end result is significantly improved margins, higher average revenue per user (ARPU), and better operational leverage.

Globally accessible market: Cryptocurrency trading operates 24/7, crossing different jurisdictions and time zones.

Staking, tokenized stocks, swaps, wallet fees, L2 fees, and programmatic cryptocurrency order flow can all expand margins and revenue.

User base: Robinhood primarily serves millennials and Gen Z, who will inherit the wealth of the baby boomer generation in the coming years and are increasingly inclined to use cryptocurrency-native services and Robinhood's top-notch mobile experience.

The cryptocurrency infrastructure can reduce costs, create new revenue streams, and enhance operational leverage. As the infrastructure improves, Robinhood is expected to become the "gateway" in areas such as DeFi, staking, trading, and payments.

Robinhood is leading the charge into the cryptocurrency space, building a moat with its large user base, comprehensive service offerings, and cryptocurrency infrastructure. We believe that as the customer demographic shifts, traditional platforms like Charles Schwab will find it difficult to compete.

Risks

Competition

Currently, all major brokerages and trading platforms are offering cryptocurrency trading services, including Charles Schwab, Fidelity, Interactive Brokers, Webull, and E*Trade.

They all want to capture the high fees associated with cryptocurrency trading. This competition is likely to compress Robinhood's profit margins.

At the same time, Coinbase is leading in cryptocurrency-native infrastructure and product suites.

Execution Risk

The team faces a daunting task of seamlessly integrating Robinhood's user experience and mobile app with the cryptocurrency platform. This is no easy feat.

Tokenization Strategy Risk

The true value of tokenization lies in the actual shares being tokenized.

Why?

This means that shareholders' cryptocurrency wallets (which have completed KYC verification) will become the official record of ownership, meaning dividends will be paid directly to that wallet.

Currently, Robinhood does not have the authority to decide which stocks can be tokenized and which cannot. The issuer (the company) has the decision-making power.

Do they have the motivation to tokenize now?

We believe this remains to be seen. If they can, they would want to tokenize:

• Reduce issuance costs
• Expand distribution
• Improve liquidity
• Lower settlement friction
• Tap into new investor groups globally

Currently, these advantages are not enough to motivate large existing enterprises to tokenize, especially before new regulatory frameworks are established.

Moreover, shareholders are not currently demanding tokenization, and we believe that existing traditional service providers (such as transfer agents, prime brokers, custodians, settlement networks, market makers, fund administration/middle office) are all opposed to tokenization.

What is the focus?

Robinhood has a strong incentive to push for tokenization. However, their control over the decision to adopt tokenization by issuers is limited. We believe this will take longer than the market currently expects.

Conclusion

Robinhood's revenue compound annual growth rate over the past five years has reached 34%. In recent years, the platform has made significant progress across various trading lines, with new revenue streams from Robinhood Gold, prediction markets, and a range of cryptocurrency services (wallets, staking, transfers, European expansion, crypto co-branded cards, Arbitrum Layer 2) indicating a bright future.

We recognize its leadership team: they have delivered an excellent user experience in the past and have a vision for a "full-scale entry into cryptocurrency." From a personal user experience perspective, the asset transfer process is convenient and efficient. Notably, Robinhood is essentially launching a "vampire attack" (offering cash rewards for asset transfers, which is 2-4% of the transferred value) against companies like Charles Schwab, Fidelity, and Coinbase. (Note: "vampire attack" is a competitive strategy where a new protocol attracts liquidity, users, and trading volume from an existing dominant protocol by offering significantly more attractive incentives, such as higher yields or token rewards.)

At the same time, Robinhood is challenging Coinbase in the cryptocurrency-native service space and is leading in the tokenization strategy. Therefore, we believe Robinhood has the potential to become a leading financial institution in the future.

In the cryptocurrency-native service space, Robinhood is actively challenging Coinbase's market position and holds a leading advantage in tokenization strategy. Based on these factors, we believe Robinhood has the potential to become a leading institution in the financial industry.

However, Robinhood's current price-to-earnings (P/E) ratio is as high as 56 times. Our analysis suggests that its cryptocurrency revenue (currently accounting for 21% of total revenue and being an important revenue component) may face some pressure in the short term, while retail investors' risk appetite is also showing signs of cooling.

Given the lessons learned from a 25% revenue decline and an 80% stock price pullback in 2022, we expect the company's stock price may experience a similar significant correction in the current risk-averse market environment. However, from another perspective, this could also provide an excellent buying opportunity for long-term investors.

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