Users are three times more than Coinbase: Why does the market prefer Robinhood?

Source: The DeFi Report; Author: Michael Nadeau; Translation: BitpushNews

The best-performing “altcoins” in this cycle are actually not tokens—they are crypto-related stocks. Among them, Robinhood stands out as the most rapidly rising.

Its stock price has surged 17-fold in less than two years, turning one of our most contrarian investments (HOOD was down 80% from its IPO price in 2022) into a major win in our portfolio.

We first accumulated shares during the last bear market (average cost $21.49) and exited in October, locking in over 550% gains.

Now, with accelerating product development and a more diversified revenue mix compared to two years ago, Robinhood has officially returned to our “Watch List” (our bear market shopping list).

This report updates on the company’s fundamentals, valuation, and strategic push into crypto assets and predictive markets based on the latest data.

Disclaimer: The opinions expressed are personal views of the author and should not be relied upon as investment advice.

Revenue and Revenue Growth

Data Source: Yahoo Finance, Robinhood

Robinhood achieved $2.95 billion in revenue in 2024, up 58% from 2023. As of the third quarter of this year, it generated $3.19 billion—already exceeding the total for the entire last year.

Over the past twelve months, the company’s revenue reached $4.2 billion (up 31% year-over-year).

Below, we break down the revenue sources and growth across different business lines.

Revenue Composition Analysis

Data Source: Robinhood 10Q

Key Points

• Over the past five years, Robinhood’s compound annual growth rate (CAGR) in revenue has been 34%. In Q3, it posted a record net profit of $565 million (up 271% YoY).
• Cryptocurrency accounts for 21% of Robinhood’s total revenue this year (the same as last year).
• Year-to-date, trading-based revenue is $1.85 billion (higher than $1.65 billion in 2024). Overall, trading revenue makes up 58% of total revenue (down from 77% in 2021).

This tells us that 1) trading-based income (including stocks, options, and crypto) is growing,

and 2) Robinhood is continuously adding new revenue streams.

What are these new sources? The annualized revenue from predictive markets (via Kalshi) has reached $100 million. This is their fastest-growing business line ever.

Robinhood Gold now has 3.9 million users paying $5/month, generating $234 million in annual subscription revenue. We also use this product ourselves.

Fees for instant withdrawals, futures markets, and exchange income (Robinhood Credit Card) have increased “Other Income.”

In addition to trading-based revenue and new income streams, Robinhood has generated over $1.1 billion in net interest income in Q3 alone (35% of total revenue).

Trading Revenue

Data Source: Robinhood 10Q

Key Points

• Options are Robinhood’s cash cow.
• Cryptocurrency ranks second, though it accounts for only 12% of stock trading volume.
• This highlights Robinhood’s exceptional business model in crypto trading.
• Stock trading accounts for 88% of trading volume but only 7% of trading revenue.

Fundamentals

Users

Data Source: Robinhood

As of September 30, 2025, Robinhood has 27.1 million funded accounts. The five-year compound annual growth rate (CAGR) of users is 22.6%. Most of the growth occurred in 2020.

Valuation Comparison

Key Insights

• Hyperliquid (perpetual contracts + spot trading) dominates volume but generates the least revenue.
• Uniswap faces the biggest challenge in monetizing users, as historically 100% of trading fees go to liquidity providers (recent governance proposals are changing this).

COIN vs HOOD

• Coinbase’s user base is about one-third of Robinhood’s, but its revenue is nearly double.
• However, in terms of market cap, Coinbase’s trading valuation is at a 53% discount to Robinhood.

Why?

We believe the market favors Robinhood because of:

• Diversified business covering stocks, options, prediction markets, and crypto.
• Robinhood is seen as a “super app,” expanding into consumer/retail finance. Coinbase is still primarily viewed as a “cryptocurrency exchange” (despite its broader offerings).
• Regulatory licenses. Robinhood is registered as a broker-dealer, regulated by FINRA and SEC. Coinbase is not. This means Coinbase cannot offer stocks, options, margin lending, etc.
• It has a larger, more active user base. Coinbase has struggled with user growth since 2021.

Compared to traditional financial firms, Robinhood’s revenue in the past 12 months is 18% of Charles Schwab’s. Schwab has 38 million active accounts (Robinhood has 27.1 million).

Product Roadmap

Robinhood Crypto Development Timeline:

2018

Robinhood officially launches crypto asset trading in select states, initially supporting BTC and ETH.

2019

Obtains New York State BitLicense, allowing crypto asset trading in NY.

2020

Crypto trading volume surges significantly. This coincides with a major growth in Robinhood’s user base, as COVID-19 rekindled retail investors’ interest in stocks and crypto.

2021

Robinhood reports that Q1 crypto trading accounts for 41% of its revenue, mainly driven by Dogecoin trading (which accounts for 25% of all revenue!). Later that year, Robinhood files for an IPO, citing crypto trading as a key part of its business.

2022

Announces the launch of a crypto wallet feature, allowing users to deposit and withdraw crypto assets.

2023

Adds multiple new cryptocurrencies for trading on the platform and plans expansion into the EU.

2024

• Announces partnership with Arbitrum (Ethereum layer 2 network), enabling users to access DEX swap trading on Arbitrum. The team then announces integration with MetaMask, allowing users to buy crypto on Robinhood and fund their wallets via debit card, bank transfer, or Robinhood account balance.
• Later launches staking services for European customers, along with a crypto trading API—providing market data access and programmable order functionality.
• Acquires global crypto exchange Bitstamp, with 4.4 million users and $200 million revenue.
• Announces support for Base (Coinbase’s L2).
• Becomes the main gateway for retail traders into crypto assets (more assets, wallet access, integrations, lower fees).

2025

• Fully integrates the Bitstamp exchange.
• Launches Robinhood Crypto Wallet v2 (cross-chain swaps, DeFi integrations, Arbitrum features, potential Base and Solana swaps, Web3 wallet experience).
• Awaiting US approval for crypto asset staking services.
• Offers institutional crypto services via Bitstamp.
• Plans to build an L2 on Arbitrum.
• Plans to tokenize public and private equities (24/7 trading, instant settlement, DeFi integration, global access for non-US users, lower costs compared to traditional brokerage channels).

The last point is Robinhood planting seeds for a move toward “full cryptoization,” leveraging its infrastructure (Bitstamp, Robinhood Crypto, Arbitrum) and user base to cover:

• Regulated global exchanges
• Integrated staking and custody solutions
• Tokenization with DeFi integration
• Wallets and payments
• On/off ramps

What’s the conclusion?

Robinhood is building a full-stack tokenization + crypto trading and financial services platform.

Future Roadmap

Phase One (Ongoing)

• Nearly 800 tokenized public stocks available in the EU, expanding into private equity.
• Trading only within Robinhood app (no external transfers).
• Built on Arbitrum.

Phase Two (Early 2026)

• Enable 24/7 trading via Bitstamp, synchronized with crypto trading.
• Global access + ongoing liquidity.

Phase Three (End of 2026?)

• Tokenized stocks become withdrawable and composable in DeFi.
• Users can use tokenized stocks as collateral in DeFi (e.g., on Aave).
• Ultimate vision: surpass traditional brokerage, fully permissionless, programmable assets.

Why choose crypto?

Unlike stocks (which Robinhood heavily relies on order flow payments), crypto trading employs a completely different and more profitable revenue model. Since there’s no NBBO (National Best Bid and Offer) in crypto markets, Robinhood does not sell order flow to market makers. Instead, it earns revenue from spread and routing economics, capturing the difference between what it quotes to users and the cost of sourcing liquidity (via internal market makers or Bitstamp).

This means they have more control over their trading economics and can retain a higher share of revenue from each crypto trade. The ultimate result is significantly higher profit margins, higher ARPU (average revenue per user), and better operational leverage.

• Global addressable market. Crypto trading is 24/7 and operates across jurisdictions and time zones.
• Staking, tokenized stocks, swaps, wallet fees, L2 fees, and programmable order flow can all expand margins and revenues.
• Demographics. Robinhood mainly serves Millennials and Gen Z, who will inherit baby boomers’ wealth in the coming years and increasingly prefer native crypto services + Robinhood’s top-tier mobile experience.
• Crypto track reduces costs, creates new revenue streams, and boosts operational leverage. With infrastructure in place, Robinhood could become the “front door” to DeFi, staking, trading, payments, and more.

By first rushing into crypto, Robinhood is building a moat through its 1) user base, 2) service suite, and 3) crypto infrastructure. We believe this will be difficult for existing platforms like Charles Schwab to compete with, especially as customer demographics shift.

Risks

Competition

• Every major broker and trading platform is now implementing crypto trading. Charles Schwab. Fidelity. Interactive Brokers. Webull. E*Trade.
• They’re all chasing those lucrative crypto trading fees. This competition could compress Robinhood’s margins.
• Meanwhile, Coinbase remains a leader in crypto-native infrastructure and product suite.

Execution Risk

The team faces a daunting task of integrating Robinhood’s top-tier user experience and mobile app with the crypto track, which is no easy feat.

Tokenization Strategy Risks

The real benefit of tokenization lies in actual shares being tokenized.

Why?

This means that shareholders’ crypto wallets (KYC-verified) are the official ownership records. Dividends will be paid into these wallets.

Right now. Robinhood cannot decide which stocks are tokenized and which are not. Issuers (companies) make that decision.

Do they have incentives to tokenize today?

In our view, this is uncertain. We believe that if they can:

• Lower issuance costs
• Broaden distribution channels
• Increase liquidity
• Reduce settlement friction
• Unlock new global investor pools

then they will be motivated to tokenize.

Today, these benefits are insufficient to motivate large existing companies to tokenize. They won’t do it before new regulations are introduced.

Moreover, their shareholders currently have no demand for it. We also believe that existing service providers—such as transfer agents, prime brokers, custodians, settlement networks, market makers, fund admin/back office—oppose such moves.

Key point?

Robinhood has huge incentives to push for tokenization. However, their control over issuers’ adoption of tokenization is limited. We believe this will take longer than the market currently expects.

Summary

Robinhood’s revenue has grown at a 34% CAGR over the past five years. Recent growth has come from all trading lines (crypto, stocks, options).

Additional revenue from Robinhood Gold, prediction markets, and crypto services (wallets, staking, transfers, EU expansion, crypto-linked cards, Arbitrum L2) indicates a bright revenue outlook.

We like this leadership team. Their track record of delivering excellent user experiences and their vision for “full crypto”.

Transferring assets on this platform (seamless and fast process) and offering incentives (cash rewards of 2-4% of asset value) for asset transfers, Robinhood is effectively launching a vampire attack on Charles Schwab, Fidelity, Coinbase, and others.

At the same time, they are challenging Coinbase in crypto-native services and leading in tokenization strategies.

We believe Robinhood is poised to become a future leading financial institution.

That said, its current trading price values the company at a 56x P/E ratio. We expect crypto revenue (currently 21% of total income) to face headwinds in the short term, along with retail investors’ risk appetite.

Considering the 25% revenue decline and 80% retracement in 2022, we may see similar significant adjustments in risk-averse environments. We believe this could present an excellent long-term buying opportunity.

This is why HOOD remains on our watch list.