Jeff Santoro

I think if we see a booming economy continue for a while, those banks, the M&A activity, I think that's all going to continue and these banks should do well.

What I worry about as an investor is, if we see a downturn, and we will at some point, it's just a matter of when, I feel like that could really hit the brakes on some of these businesses that are putting up some strong numbers so far here in 2025.

To me, this is a story about how speculative and gambling vibes are everywhere in the markets right now.

Let's remember how Robinhood makes its money.

You talked about this a little bit.

Most of the revenue, 54% in this last quarter, comes from transaction revenue or payment for order flow.

Put another way, every time someone trades, they make a little bit of money.

So, the market booms, people are excited, there's exuberance, a lot of trading happens, and you're going to see them have great quarters over and over again until that slows down.

So, just as an example, in the last reported quarter, their revenue from options trading grew 46%, from equities, that grew 65%, and cryptocurrency grew 98%.

So, people are clearly transacting, and Robinhood is benefiting.

Now, I guess the question is, can it continue?

And that's where the valuation factor comes in.

I think it can, as long as the vibes that we see in the market right now continue.

What concerns me, though, is their user growth.

In the last quarter, their funded customers only grew by 10%, while total platform assets grew 99%.

So, the results are clearly being fueled by more people trading more often, rather than really strong user growth.

It's worth remembering that in 2021, the last time the market was similar to how it is now, they posted $1.4 billion in total transaction revenue for that year.

That metric dropped to $814 million the next year, $745 million the year after that, before returning back to these lofty highs we've seen more recently.

I think for this business, as it's currently constituted, and I know they are making some changes to

change this for the future.