Robinhood Stock Is a Durable Long-Term Investment, Bargain Price Now

Robinhood’s (HOOD) IPO journey looks complete. The stock of the retail broker is set to make its market debut on July 29. Many investors want to know if Robinhood is a good long-term investment. What’s Robinhood's stock forecast and where will it be in 2025?

Robinhood sold 52.4 million shares in the IPO. The deal raised about $2 billion at the price of $38 per share and valued the company at $32 billion. Robinhood has been a major beneficiary of the rise in retail trading in stocks and cryptocurrencies.

Robinhood marketed its IPO stock in the range of $38–$42. It ended up pricing the deal at $38 per share. That puts HOOD stock on track to soar on debut. Investors will likely rush to take advantage of what looks to be a bargain opportunity following the IPO pricing at the low end of the marketed range.

Where Robinhood stock will be in 2025 is difficult to pinpoint at this time considering that the company is just going public. However, there's a high chance that HOOD stock will have more than doubled by 2025.

Coinbase, which mainly offers crypto trading, has its stock valued above $240, but Robinhood offers more services. In addition to crypto trading, it supports stocks, ETFs, and options trading. HOOD stock looks poised to soar as investors realize that Robinhood stands a better chance to benefit from the online trading boom.

Robinhood has many competitors in the retail brokerage market. In addition to trading apps SoFi and Webull, it also competes with traditional brokerages like Fidelity, E-Trade, and Charles Schwab.

Robinhood and E-Trade both offer commission-free trades and require no account minimums. They both support trading in stocks and options. Robinhood offers cryptocurrency trading, which isn’t available on E-Trade.

Also, Robinhood has attracted more clients than E-Trade. At the end of March 2021, Robinhood had 18 million brokerage accounts compared to E-Trade’s 7.2 million. Robinhood’s latest figures show that its brokerage accounts increased to 22.5 million at the end of June 2021.

Robinhood has been growing rapidly in client accounts and revenue. The company estimates its second-quarter revenue to come in the range of $546 million–$574 million. Even the low end of that range would represent double growth from revenue of $244 million a year ago. The revenue increased about 310 percent YoY to $522 million in the first quarter.

However, Robinhood has cautioned that its growth might slow down because of cooling retail trading activities. Retail traders have been behind a boom that has provided a strong tailwind for online brokers like Robinhood.

Another factor to consider when evaluating HOOD stock as a long-term investment is the risk to Robinhood’s order-flow business. Robinhood gets paid for generating orders for market makers. It collected more than $330 million from such arrangements in the first quarter. However, order flow payments are under regulatory scrutiny, which brings uncertainty in what has been a lucrative business for Robinhood.

Despite the growth slowdown caution and the scrutiny of the order flow business, Robinhood looks durable as an investment. Most of the company's customers are young people. If Robinhood can maintain those customers, it could drive value from them for a long time.