Robinhood Stock Has Soared 315% From Its 52-Week Low. Is It Too Late to Buy?

Core Viewpoint - Robinhood's stock has experienced significant volatility, with a 90% decline from its all-time high in 2022, followed by a 315% recovery from its 52-week low, but key risks may limit future growth potential [2][11]. Revenue and User Metrics - Robinhood's transaction revenue peaked at $451 million in Q2 2021 but has since declined, with Q3 2024 revenue at $319 million, down from both Q1 and Q2 2024 [4][5]. - Monthly active users have decreased to 11 million in Q3 2024, a 48% drop from the 2021 peak, indicating a potential loss of platform appeal [5]. Interest Income and Economic Factors - The U.S. Federal Reserve raised interest rates from 0.13% to 5.33% between March 2022 and August 2023, benefiting Robinhood's interest income [7]. - Robinhood's net interest revenue reached an all-time high of $285 million in Q2 2024 but fell to $274 million in Q3 2024, with expectations of further declines due to recent rate cuts [9][10]. Valuation Concerns - Robinhood's price-to-sales (P/S) ratio has risen to 12.1, a 59% premium over its long-term average of 7.6, despite declining transaction revenue and potential decreases in net interest revenue [11][12]. - The current valuation may not be justified given the company's revenue trends, suggesting that new investors could face risks if revenue does not meet expectations [12].