Robinhood: The rise and fall all depend on Trump, when can we "control my own destiny"?

Thanks to Trump's reconstruction of the virtual currency market, the American retail brokerage Robinhood$Robinhood(HOOD.US) (hereinafter referred to as HOOD) made a comeback in 2025.

From the perspective of Dolphin Research, what needs to be understood through the performance is how much of HOOD's performance improvement is sustainable and how much is due to the cyclical dividends brought by the bull market in asset markets. Let's take a closer look:

I. Crypto is a cash cow, options are the ballast.

The trading-related income is as follows:

1) Virtual assets: still a cash cow, but momentum is weakening. Although the trading volume of virtual assets has significantly dropped from its peak in the first three months of 2025, HOOD's current virtual asset income is actually driven by both trading volume and monetization rate: the year-on-year growth rate of virtual asset trading volume slowed to 28% in the first quarter, but the monetization rate remained relatively high year-on-year.

Virtual asset income reached $250 million, although it declined quarter-on-quarter, it is still HOOD's largest single source of income, contributing nearly 30% of total revenue.

2) Options business as the cornerstone: As another pillar of trading business income—options have actually performed more stably than meme stocks and virtual assets, which may also be related to the high volatility of assets in the first quarter.

Whether it's the trading volume (HOOD has announced it monthly in advance) or the monetization rate shown in this quarter's financial report, both are at high levels, which has also driven options income to increase from $220 million to $240 million, making it the only business among the three major pillars of trading that has seen quarter-on-quarter growth.

3) Stock trading—most user asset allocation, lowest asset monetization. As an asset category for user asset allocation in trading business, HOOD earns relatively little income through the model of distributing user orders In the first quarter, although the number of stock trades remained unchanged, the monetization rate of the underlying stocks declined again, resulting in stock trading revenue falling to USD 56 million on a quarter-on-quarter basis.

II. Overall interest-bearing business, except for financing business, other good practices can be mentioned

HOOD's interest-bearing business mainly serves to raise HOOD's overall gross margin level, with revenue growth constrained by market interest rate trends, resulting in overall slow growth.

In the first quarter, the entire interest-bearing business (including proprietary funds, isolated cash, customer funds, margin trading, and credit card income) totaled USD 290 million, a slight quarter-on-quarter decline of 3%.

The current downward trend in interest rates is overall negative for its interest-bearing business. Among the interest-bearing businesses, only the financing business, by leveraging the increase in financing balance, countered the downward gravitational pull of interest rates, achieving positive quarter-on-quarter revenue growth of USD 110 million in the first quarter.

III. Expenditure mainly driven by increased marketing expenses: This quarter, management expenses appear to have increased significantly quarter-on-quarter, but this is actually due to an unusual regulatory settlement from the previous quarter that led to expense write-offs. If this impact is not considered, the management expense in the first quarter should be regarded as relatively restrained.

The main issue lies in marketing expenses, which increased by 28% quarter-on-quarter despite a 9% quarter-on-quarter decline in revenue.

From a detailed expense perspective, the two largest expenditures—brand promotion and digital marketing—saw a significant increase (almost 60% quarter-on-quarter), but the market conditions in the first quarter were actually not as good as in the fourth quarter of last year, leading to a short-term mismatch in input-output.

Ultimately, the revenue of USD 927 million translated into an operating profit of USD 370 million, with a profit margin of 40%, slightly lower than Dolphin Research's estimate of around 50% for its operating profit margin this year.

IV. Customer acquisition costs skyrocketed, making it still difficult to acquire customers

Compared to the influx of users brought by the virtual asset bull market in the fourth quarter of last year, this quarter saw a net addition of 600,000 users, but this includes 100,000 new users from the consolidation of TradePMR, resulting in an actual net addition of 500,000.

At the same time, the 700,000 gross new users for the quarter correspond to a customer acquisition cost per user that has risen to nearly $200 (actually $194). Due to Dolphin Research's calculations, the user churn rate has increased, meaning the actual customer acquisition cost per user is even higher.

V. Serious issue: User growth, but endogenous AUM has actually declined

This quarter, Dolphin Research was truly disappointed that HOOD's AUM performance was somewhat weak. It looks very high at $220 billion, but over $40 billion of that is due to the acquisition of TradePMR, which brought in consolidated AUM assets.

Looking only at endogenous AUM, it is less than $180 billion, down from $193 billion in the previous quarter. In fact, although there were more users in the first quarter, the assets of those users have actually shrunk. This also corresponds to the net outflow of 400,000 users this season, indicating that many users have taken their money away from the HOOD platform.

VI. Performance overview is as follows:

Dolphin Research's investment perspective:

HOOD's revenue growth of 50% year-on-year in the first quarter looks very promising. However, behind this growth, it is more about the existing assets and business layout relying on cryptocurrencies endorsed by the Trump administration, which have strengthened HOOD's asset activity due to the bull market, and its light asset model has further amplified its profit-generating capacity. HOOD has become a bull market amplifier for virtual assets under such market conditions.

In last quarter's commentary, Dolphin Research mentioned that even though the vast potential of cryptocurrencies has raised HOOD's valuation floor, the $50 billion valuation (with $4 billion in annualized revenue, a 50% operating profit margin, and a 10% tax rate, corresponding to a PE level of 25-28X for 2025, with the company guiding for double-digit growth in the long term) seems more like a linear extrapolation of an optimistic scenario driven by the bull market.

In reality, after the first quarter of 2025, both U.S. stocks and virtual assets have entered a state of adjustment, and HOOD has not been able to stay too long at the $50 billion+ position.

Considering that U.S. dollar interest rates are expected to decline further—interest-bearing businesses will continue to face pressure, making growth quite challenging.

In the short term, it will still mainly rely on options and virtual assets, and it will be somewhat difficult to further elevate the revenue heights of the last quarter of last year In the absence of a major bull or bear market, its stock price fluctuation range is likely to oscillate within the 20-25X PE space of the estimated profits for 2025, which is between USD 36 billion and USD 45 billion. To stabilize above USD 50 billion, there must either be a more stable bull market, especially in virtual assets, or the emergence of other truly incremental markets or new businesses, with the latter appearing to be even less probable than a bull market.

As for why HOOD's stock price has been so convoluted after the earnings report (first rising, then falling, and then recovering lost ground, essentially showing ineffective movement over four trading days), Dolphin Research's judgment is that under the current valuation expectations, the market will not focus on how much HOOD has grown year-on-year compared to last year, but rather whether it can outperform a high base from a single quarter.

Last year's fourth-quarter revenue exceeded USD 1 billion, while this year's first quarter returned to over USD 900 million, and it will also face pressure from interest income due to declining interest rates. In fact, achieving the revenue target of USD 4 billion estimated by Dolphin Research this year is still quite challenging.

One can only keep an eye on the virtual market trends to see if there are any significant gifts coming up. Fortunately, after the virtual asset pullback in April, it has slowly recovered.