Robinhood: Stock tokens have a promising future, will the retail king be invincible?

After doubling its market value in a quarter and approaching $100 billion, American retail brokerage Robinhood released its earnings report on July 31st in the US stock market. How good are the results, and do they justify the $100 billion valuation? Let's take a closer look:
1. Increase in Transaction Monetization Rate

For users, Robinhood has always been known for its low trading fees. However, this quarter, Robinhood's overall transaction monetization rate increased, mainly driven by options and virtual asset products, while equities continued to decline.

1) Virtual Assets: Although the company's stock price rise relies entirely on innovation and imagination in the virtual asset field, the company's performance in virtual assets was relatively flat in the second quarter. The trading volume was $28.3 billion, down 39% quarter-on-quarter, exceeding the overall market decline.

Fortunately, the monetization rate improved: in the second quarter, for every $10,000 of trading volume, HOOD collected $56.54 (56.54 basis points), an increase of $2 quarter-on-quarter. The virtual asset business revenue for the single quarter was $160 million, basically within expectations;

2) Options as a Stabilizing Force: As the main revenue contributor to the trading business, the second quarter brought in $270 million, surpassing the critical $20 million mark set by Shi Yuqi, also due to the increase in monetization rate: a commission of $0.51 per options contract, an increase of three cents;

Additionally, the number of options contracts reached 1.2 million, slightly higher than market expectations. However, since trading data such as AUM, trading volume, DARTS (including the number of options contracts) are published monthly by the company, the market is generally already aware, with marginal incremental information mainly being the monetization rate.

3) Equity Trading—Most User Asset Allocation, Lower Asset Monetization. As the asset category for user asset allocation in the trading business, the income earned by HOOD through the wholesale of user orders is still not much. The number of trades in the second quarter did not change significantly, with revenue growing quarter-on-quarter to $66 million, mainly because the turnover rate (total trading volume/total stock assets) increased to 3.62 times this quarter.

However, the monetization rate still declined, only 1.28 basis points, meaning for every $10,000 of trading volume, HOOD could only earn $1.28 through wholesale of order flow.

2. Overall Interest Income: MEME Stock Market Bullish

HOOD's overall interest income business has performed much better than market expectations since the beginning of the year, largely because the Federal Reserve has not cut interest rates after entering 2025.

In the second quarter, the company's statutory segregated cash interest reached $77 million (including $58 million in securities lending collateral income), partly due to the increase in segregated cash yield (annualized yield of 1%).

Also notable in the second quarter was the boost in securities lending business due to MEME stock speculation: total securities lending income reached $112 million, with the yield rebounding from 3.4% last quarter to 4.1%, mainly because the cost of borrowing securities for users increased.

Considering the active MEME stock market in the second quarter, the high cost of borrowing such stocks is a clear benefit for HOOD.

Total revenue for the second quarter: $989 million, nearly $1 billion, up 45% year-on-year; however, due to the sharp increase in valuation, it is more important to look at the annualized growth rate of quarter-on-quarter growth, which corresponds to approximately 30% year-on-year for the second quarter. To match the current valuation of over 50 times, this growth needs to continue to rise.

3. Comprehensive Control on Expenditure

Throughout the second quarter, despite continuous product development and innovation, the company performed excellently in terms of expenditure. Firstly, apart from acquisitions, the number of employees itself decreased quarter-on-quarter, with the company's expenditure mainly based on headcount, which did not increase, making the expenditure side inherently controllable.
At the same time, marketing expenses, operating expenses, and even management expenses decreased this quarter.

Ultimately, the $927 million in revenue was converted into $439 million in operating profit, with a profit margin of 44.4%, slightly higher than the 40% in the first quarter. It is highly probable that it will reach the 50% estimated by Dolphin Research in the future.

4. Entering a New Phase: Acquisition-Based Innovation!

When Dolphin Research first covered this company, the judgment was that it was difficult for the company to rely solely on order flow distribution to succeed everywhere. Entering 2025, we finally see the company starting a new phase of innovation, which Dolphin Research simply summarizes as acquisition-based innovation:

Entering or changing new industries and markets by purchasing small-scale assets, with the core goal of obtaining licenses, and then starting to innovate and transform existing products.

In addition to previously acquired banking assets (mainly for credit card business), since the first quarter of this year, the company has successively acquired the registered investment advisory platform TradePMR and the European virtual asset exchange Bitstamp. Especially after acquiring Bitstamp, the company has completely opened the "Pandora's box" in product innovation, igniting market imagination.

The new phase of acquisition-based innovation is typically reflected in the financial statements: the first phase involves the AUM and asset clients brought in through acquisitions, and the second phase involves the increase in endogenous users and AUM, as well as platform trading activity.

Of course, the financial statements are currently still in the first phase, mainly reflected in the external growth of AUM (virtual asset AUM of $9 billion, virtual asset trading volume of $6.7 billion in June) and users (Bitstamp brought in 520,000 new asset clients).

In the second phase, endogenous AUM begins to grow with the expansion of trading products and varieties, and asset clients also start to increase. Since the acquisitions have only occurred in the last two quarters, it is not yet obvious:

Net inflow for the second quarter was $13.8 billion, with a net increase of asset clients of $2 billion (excluding 5 billion Bitstamp clients), and the AUM per new client was approximately $20,000, which is not too far off from the average AUM of four to five thousand dollars when the company started.

6) Performance Overview:

Dolphin Research's View

For American retail brokerage Robinhood, the resurgence in 2025, if the first half relied on Trump's favor in reshaping virtual currency assets, then the second half was Robinhood's own diligent efforts. The combination of the two opened up a broad avenue in the virtual asset world for itself.

In the second quarter, Robinhood took just one quarter to directly raise its stock price from $50 to $105, with its market value almost reaching the $100 billion mark.

What exactly enabled it to achieve the $100 billion market value milestone in just one quarter, which other brokerages find difficult to achieve even in a decade? The answer is actually quite simple—virtual assets, more specifically, after merging with Bitstamp, the virtual asset track began telling a new story of product innovation, specifically:

One is that stablecoins open up new imaginative space in the virtual asset market, and the second, which truly allows Robinhood to run out of Alpha, is the grand stock token track that the company itself pioneered:

On the second point, at the Catch a Token launch event held in France on June 30th, Robinhood launched a stock token tool for all users in the European Economic Area on the virtual asset track, allowing European users to earn the returns from fluctuations in US stocks and ETFs without opening a US stock account (see the summary diagram by Dolphin Research for detailed operation).

Moreover, it also launched activities to send first-level stock tokens, such as OpenAI and StarX. In the upcoming plans, in addition to first-level assets, Robinhood will also launch on-chain tokens for real-world assets such as artworks and real estate.

How is Robinhood's stock token designed?

In addition to tokens, Robinhood:

a. Launched perpetual options in Europe,

b. Launched virtual asset staking in the US;

c. Introduced smart exchange routing functionality, providing tiered pricing based on trading volume, such as a minimum trading fee rate of 10 basis points for users with monthly trading volume exceeding $5 million (note: this was mentioned before);

d. Advanced charting features on the desktop have been introduced to the mobile platform;

e. Rewards for gold member credit card users can be directly exchanged for virtual currency;

e. Upgraded virtual currency transfer rewards from the originally planned 1% to 2%.

f. AI investment assistant Cortex is now available on the virtual currency app.

g. The stablecoin USDG supported by the company has obtained EU MiCA regulatory approval.

It can be said that the importance of this wave of releases may be completely comparable to the company's initial launch of the industry-disrupting zero-commission order wholesale business model.

Overall, although the second quarter's performance exceeded expectations, the fundamental change in the company's revenue and profit performance expectations is not too significant, still hovering around $1 billion per quarter, with quarterly profits around $500 million.

The short-term sharp increase in the company's valuation is mainly due to the long-term imaginative space of stock tokens. This release has once again allowed everyone to see a "Robinhood" in the brokerage industry that does not follow conventional paths.

The imagination is grand, and it will not be disproven in the short term, so the current market pricing seems to be pricing HOOD's serviceable market space TAM as having doubled.

With stablecoins opening up the long-term space for virtual assets and stock or asset tokens further expanding Robinhood's business ceiling, as long as the virtual asset bull market continues, HOOD is likely to remain a continuous Alpha stock in the brokerage Beta market, meaning its decline is controllable in each downturn, and its elasticity is higher in each rise.

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