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Robinhood (NASDAQ: HOOD) has had its fair share of scrutiny, but the company has turned things around recently, and its progress was hard to ignore in 2024. During that year, Robinhood stock jumped 192.5%, according to data from S&P Global Market Intelligence.
The company has done a good job diversifying its offerings and attracting more investors to its platform. Here's what investors need to know about its performance and what's next for the fintech.
Robinhood has done a stellar job attracting capital
Through November, Robinhood had 24.8 million funded customers, a solid increase of 6% year over year. But what's more impressive is the amount of capital it has attracted to its platform. In just 12 months, Robinhood's assets under custody (AUC), the assets it holds on behalf of customers, ballooned to $194.6 billion, a 106% increase from one year earlier.
Robinhood has succeeded in attracting customers to its platform with its appealing annual percentage yield, which topped out around 5% last year. This high yield is available only to its Robinhood Gold customers, who pay a $5 monthly subscription.
Robinhood prefers Gold members because of the recurring revenue and because these users are much more active on its platform. According to CFO Jason Warnick, Gold subscribers have 8 times more assets, generate significantly more average revenue per user, and adopt retirement accounts 5 times as often.
The company has also taken steps to attract more assets by offering traditional individual retirement accounts (IRAs) and Roth IRAs. It also matches contributions, 1% for customers or up to 3% for those with Robinhood Gold.
Retirement accounts have been a big draw. The number of customers with these accounts has grown from 390,000 in the third quarter of 2022 to 940,000 in the most recent third quarter. Meanwhile, the AUC in retirement accounts ballooned from $1.1 billion to $9.9 billion.
What's next for Robinhood?
Robinhood has navigated difficult times and posted four consecutive quarters of profit per generally accepted accounting principles. It will continue to focus on growing its retirement account offerings and AUC, which will help provide it with a strong capital base.
HOOD Revenue (TTM) data by YCharts
And the company continues to innovate. It has introduced Robinhood Legend, a desktop suite of investing tools, and announced that it will start offering index options and futures.
Following the stock's surge, it is priced at 73 times earnings and 29.5 times this year's forecasted earnings. While the stock appears expensive, it is growing at a nice clip and attracting younger buyers, making it an intriguing stock for aggressive, growth-focused investors.