Buy or Sell HOOD Stock At $72

Core Viewpoint - Robinhood Markets (NASDAQ:HOOD) has experienced a surge of over 25% in the past month due to speculation regarding its potential inclusion in the S&P 500 index, but it was not added in the latest quarterly rebalance, raising questions about its current valuation at $72 and whether it remains a good investment [2][3] Valuation Analysis - The current valuation of Robinhood is considered too high despite minimal fundamental concerns, with a price-to-sales (P/S) ratio of 19.9 compared to 3.0 for the S&P 500, a price-to-free cash flow (P/FCF) ratio of 58.6 versus 20.5 for the S&P 500, and a price-to-earnings (P/E) ratio of 40.9 against 26.4 for the benchmark [8][11] - Robinhood's revenues have grown significantly, with a 59.6% increase from $2.0 billion to $3.3 billion in the last 12 months, and quarterly revenues rising 50.0% to $927 million from $618 million a year ago [8][11] Financial Performance - Robinhood's operating income over the last four quarters was $1.3 billion, resulting in a high operating margin of 39.0%, and a net income of $1.6 billion, indicating a net income margin of 48.8% [14] - The company has a strong balance sheet, with a debt figure of $9.1 billion and a market capitalization of $64 billion, leading to a low debt-to-equity ratio of 14.0% [14] Growth and Profitability - Robinhood has demonstrated extremely strong growth, with an average revenue growth rate of 30.0% over the last three years, significantly outpacing the S&P 500's 5.5% [8][11] - Profit margins are considerably higher than most companies in the Trefis coverage universe, showcasing robust profitability [7][14] Downturn Resilience - HOOD stock has shown extremely weak resilience during downturns, having fallen 90.2% from its peak in August 2021 to June 2022, compared to a 25.4% decline for the S&P 500 [15] - Despite recovering to its pre-crisis peak by June 2025, the stock's performance during downturns raises concerns about its stability [10][15]