Core Insights - Robinhood has significantly transformed the discount brokerage industry by introducing free trading, compelling competitors to follow suit [2] - Visa has established itself as a leading payment processor, benefiting from the ongoing shift from cash to card payments, particularly driven by e-commerce growth [4] Company Overview: Robinhood - Robinhood is a relatively young discount brokerage, having gone public in mid-2021, and has only operated in a bull market, which may affect its resilience during market downturns [3] - The company has expanded its offerings beyond stock trading to include cryptocurrency trading and sports betting, aiming to attract more active investors [2] Company Overview: Visa - Visa has a long-standing presence in the market, having gone public in early 2008 during the Great Recession, and it processes card payments for consumers, earning fees for each transaction [4] - Over the past decade, Visa's revenue has grown at an annualized rate of 11%, with earnings increasing by 14% annually, making it attractive to growth investors [5] Valuation Comparison - Visa's current price-to-sales ratio is approximately 18.5, price-to-earnings ratio is 33, and price-to-book ratio is 17.5, with P/S and P/E ratios below their five-year averages [6] - Robinhood's price-to-sales ratio stands at 26.5, price-to-earnings ratio at 50.5, and price-to-book ratio nearly at 13, indicating that it is expensive relative to its own historical metrics [8] Investment Implications - Robinhood's high valuation suggests that investors are pricing in significant future growth, despite the company's lack of experience in bear markets [9] - Visa, while appearing expensive on an absolute basis, is reasonably priced relative to its historical valuation, making it a more stable investment choice compared to Robinhood [12]