Good morning. Robinhood’s app is a leading investing platform among younger traders and offers alternative investments like crypto. The firm, which once stood at the center of the meme stock craze, has changed how Americans invest. And it's growing fast.
I attended Robinhood’s first investor day on Wednesday in New York City. Along with analysts and institutional investors, retail investors were on hand to ask questions. Robinhood CEO Vlad Tenev announced the company is expanding into Asia next year with local headquarters in Singapore. This follows its U.K. debut in March.
As of Nov. 30, Robinhood’s assets under custody had grown to more than $190 billion, an increase of over 15% from October 2024, up over 100% year over year, driven in part by customer net deposits of over $5 billion in November. Equity notional trading volumes were over $145 billion in November, up over 15% from October, and up over 170% year over year. The company has increased adjusted EBITDA by over $1 billion in the past five years.
Robinhood pointed to three areas of opportunity: active traders, share of wallet, and global financial ecosystems. “Together, they build a total addressable market exceeding $600 billion in revenue,” CFO Jason Warnick said.
Over the last two years, the number of Robinhood accounts with over $100,000 increased fourfold to 321,000. “Winning larger customers gives me even more confidence in our ability to continue taking market share,” said Warnick, who joined the company six years ago after a 20-year career at Amazon.
The company’s costs are 90% fixed, which means that only 10% of its costs move with customer activity, he said.
Robinhood has been investing in organic growth, including things like deposit matches and marketing, as well as investing in existing and new businesses. And it has been deploying capital through M&A to drive the business even faster.
Robinhood is in the process of closing two new acquisitions. One is TradePMR, a wealth management platform for registered investment advisors, which it bought for $300 million. Over the next few decades, a wealth transfer of an estimated $84 trillion is set to unfold, leaving younger investors with more money that they may need help managing. As Robinhood enters the wealth management space, it plans to cater to this key demographic.
The other is a $200 million acquisition of Bitstamp Ltd., a global cryptocurrency exchange, founded in 2011 and has offices in Luxembourg, the U.K., Slovenia, Singapore, and the U.S. The goal is to accelerate Robinhood Crypto’s expansion worldwide.
“Going forward, with such a big market opportunity ahead of us, we'll continue to be active on the M&A front,” Warnick said.
He offered the four main attributes Robinhood considers when looking at an acquisition: “Are we getting a great team and great technology? Will it help us move faster? Can Robinhood and its large customer base ignite value in the acquired company? Are we paying a price that we think will be meaningfully accreted to shareholders over time?”
Robinhood was founded in 2013 and made its public market debut in 2021. It has certainly shaken up stock trading.
“Love or hate Robinhood, there’s no denying it has, more than any other company in recent memory, changed the way Americans invest,” Fortune’s Jeff John Roberts writes in a feature article. “It popularized rash mass purchases of stocks like GameStop and Dogecoin, but also spurred the broader brokerage industry to copy its no-cost, mobile-first approach.”
As Robinhood’s business is diversifying, “we're driving a ton of profitable growth,” Warnick said. For a closer look at the company's remarkable story, read Fortune’s “How memestock mania forced CEO Vlad Tenev to reinvent Robinhood—and himself.”
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
