The Stock Ran Far Ahead of the Numbers, Even Though the Numbers Were Genuinely Strong
The Q1 2025 post flagged the sports-event-contracts legal fight as the single most important storyline in this series going forward, and closed with the stock down 20% from its January peak. Q2 2025 flips that entirely: HOOD rose from $41.62 to $93.63 during the quarter - a 125% gain in three months, the single largest quarterly stock move recorded anywhere in this series. The operating results were genuinely strong on their own terms - total net revenues grew 45% to $989 million, net income more than doubled to $386 million, Adjusted EBITDA» grew 82% to $549 million - but a 125% stock move in a single quarter is not something this level of operating growth explains by itself.
Two acquisitions closed or were announced this quarter. Bitstamp closed on June 2, 2025 for $224 million (up from the ~$200 million estimated when the deal was first announced a year earlier), giving Robinhood immediate operations in the EU, UK, and Asia. And on May 12, 2025, Robinhood announced a second crypto acquisition: WonderFi, a Canadian digital-asset company, for approximately $180 million (C$0.36 per share), expected to close in the second half of 2025. On the legal front, a federal district court issued a preliminary injunction on April 28, 2025 in KalshiEx LLC v. Flaherty blocking New Jersey's gaming regulators from enforcing state law against sports event contracts, finding Kalshi had "a reasonable chance of prevailing" on federal preemption - a real, if not yet final, win for the legal theory Robinhood's own sports-contracts business depends on. New Jersey has appealed to the Third Circuit.
The Prescription
Robinhood should keep building international crypto infrastructure through disciplined acquisition rather than organic build-out - Bitstamp closing at $224 million gives it immediate EU, UK, and Asia operations, and announcing WonderFi within weeks shows the company treating this as a real, funded strategy rather than a one-off deal. Total opex still only grew 12% against 45% revenue growth even while absorbing acquisition costs, which is the discipline that makes this kind of expansion sustainable instead of value-destructive - the company should keep proving it can buy growth without letting spending outrun it.
What it should stop doing: letting the market treat a preliminary injunction as a settled legal win. The stock rose 125% in a single quarter, and management has every incentive to let that momentum run, but the KalshiEx v. Flaherty ruling underpinning the sports-contracts business is explicitly preliminary, already under appeal to the Third Circuit, with Maryland's version of the same fight still unresolved in a separate court. Scaling the sports-contracts product nationally, or letting investor communications lean on the injunction as if federal preemption were now settled law, gets ahead of a legal question Robinhood still doesn't control the outcome of - the same overreach flagged last quarter on the CFTC/state fight, just with better optics this time.
Key Financial Metrics
Three months ended June 30, 2025 vs. three months ended June 30, 2024 - consolidated, reported in USD.
| Metric | Q2 2025 | Q2 2024 | YoY |
|---|---|---|---|
| Total net revenues | $989M | $682M | ✅ +45% |
| Adjusted EBITDA» | $549M | $301M | ✅ +82% |
| Operating income (loss) (GAAP) | $439M | $189M | ✅ +132% |
| Net income (loss) | $386M | $188M | ✅ +105% |
| Cash and cash equivalents (period-end) | $4,162M | $4,524M | ❌ -8% |
Total operating expenses rose 12% to $550 million, roughly in line with revenue growth rather than outpacing it - continued spending discipline even amid the growth push. The provision-for-income-taxes line jumped to $56 million from $3 million a year earlier, a much more normal effective rate (~13%) than the near-zero rate in Q2 2024, when losses carried forward were still offsetting most of the tax bill.
Trailing Comparison
Quarterly total net revenues and Adjusted EBITDA, trailing four quarters recorded in this series.
| Quarter | Total Net Revenues | Adjusted EBITDA |
|---|---|---|
| Q3 2024 | $637M | $268M |
| Q4 2024 (implied) | ~$1,014M | ~$614M implied |
| Q1 2025 | $927M | $470M |
| Q2 2025 | $989M | $549M |
Q2 2025's revenue is now within striking distance of Q4 2024's election-quarter spike, and Adjusted EBITDA actually exceeded it - the strongest quarterly Adjusted EBITDA in this series' history. Six consecutive quarters of sequential-or-near-sequential growth (allowing for Q3 2024's modest dip) confirm the acceleration that began in early 2024 has continued for a year and a half, not just a couple of quarters.
Key Operational Metrics
Three months ended June 30, 2025 vs. three months ended June 30, 2024.
| Metric | Q2 2025 | Q2 2024 | YoY |
|---|---|---|---|
| Funded Customers | 26.5M | 24.2M | ✅ +10% |
| Total Platform Assets | $278.6B | $139.7B | ✅ +99% |
| Average Revenue Per User (ARPU) | $151 | $113 | ✅ +34% |
| Robinhood Gold Subscribers | 3.48M | 1.98M | ✅ +76% |
Total Platform Assets nearly doubled year-over-year, now partly reflecting the Bitstamp acquisition's assets alongside organic growth and market appreciation - a further complication for anyone trying to compare this figure cleanly against pre-2025 AUC data (see the Q1 2025 post's note on the metric's redefinition). Funded Customer growth held at double digits (+10%) for a second straight quarter, the strongest sustained account-growth rate this series has recorded since the FY2021 IPO year.
Beyond the Usual
A federal court handed Kalshi (and Robinhood's sports-contracts business) a real, if contested, legal win - now on appeal
On April 28, 2025, the U.S. District Court for New Jersey issued a preliminary injunction in KalshiEx LLC v. Flaherty blocking New Jersey's gaming regulators from enforcing state cease-and-desist demands against sports event contracts, on the theory that federal law (the Commodity Exchange Act, which grants the CFTC exclusive jurisdiction) preempts state gaming law. This directly supports the legal theory Robinhood's own sports-contracts business depends on, and follows a similar injunction in Nevada. But it's a preliminary ruling, not a final judgment, and New Jersey has already appealed to the Third Circuit Court of Appeals - a federal appellate court could still rule the other way, and Maryland's version of the same fight remains pending in district court. This is genuine, meaningful legal progress for Robinhood's position, not a resolution.
Robinhood closed Bitstamp for $224 million - $24 million more than the price agreed a year earlier
The June 2, 2025 closing price for Bitstamp came in at approximately $224 million, up from the roughly $200 million Robinhood estimated when the deal was first announced in June 2024 - a modest increase, consistent with the "customary purchase price adjustments" language in the filing rather than a renegotiation, but worth noting since the final number matters for tracking Robinhood's actual cumulative acquisition spend (now roughly $700 million across X1, MNA, TradePMR, and Bitstamp combined since mid-2023).
A second crypto acquisition, WonderFi, was announced within weeks of Bitstamp's close
On May 12, 2025, Robinhood agreed to acquire WonderFi Technologies, a Canadian digital-asset company, for approximately $180 million (C$0.36 per share), expected to close in the second half of 2025. Combined with Bitstamp, this is Robinhood's second crypto-focused international acquisition in less than a year - a clear, sustained pattern of building out international crypto infrastructure through acquisition rather than organic expansion, distinct from the domestic product launches (credit card, event contracts) this series has tracked separately.
Target Valuation Range
Very rich at the $93.63 quarter-end close - the stock's 125% single-quarter gain has pushed every valuation multiple in this series to a new high, and the reverse-DCF math now implies a revenue bar roughly 4x this quarter's actual run rate. This is the most demanding valuation this series has calculated for HOOD by a wide margin, and the operating results, while genuinely strong, don't close that gap on their own.
HOOD rose every single month of the quarter: $49.11 in April, $66.15 in May, $93.63 at quarter-end - a sustained, accelerating rally rather than a single news-driven spike, coinciding with the Bitstamp close, the WonderFi announcement, the favorable preliminary injunction, and a broader 2025 rally in crypto-adjacent and fintech names. There has been no stock split, so this is the actual nominal price quoted at the time.
| Market cap → enterprise value | Q2 2025 (period-end) |
|---|---|
| Share price (period-end, June 30, 2025 close) | $93.63 |
| Shares outstanding (Class A + B) | 888.2 million |
| Market capitalization | ~$83.1 billion |
| Less: cash and cash equivalents | $4.16 billion |
| Interest-bearing debt | none |
| Enterprise value | ~$79.0 billion |
| Peer-multiple sanity check | Q2 2025 (annualized) |
|---|---|
| Revenue basis | quarterly-annualized ($989M × 4 = ~$3.96B) |
| Enterprise value | ~$79.0 billion |
| EV/Revenue | ~19.9x |
| Adjusted EBITDA basis | quarterly-annualized ($549M × 4 = ~$2.20B) |
| EV/Adjusted EBITDA | ~35.9x |
| P/E (annualized) | ~$386M × 4 = ~$1.54B net income |
Every multiple here is more than double Q1 2025's already-elevated figures (~8.7x revenue, ~17.2x Adjusted EBITDA, ~27.4x P/E). This is squarely a re-rating driven by the stock price, not by the underlying quarter's results - revenue and Adjusted EBITDA both grew a healthy amount, but nowhere near enough to explain a doubling of every multiple simultaneously.
A simplified reverse DCF: at a ~10% discount rate, 3% terminal growth, and a 20% mature FCF margin, sustaining today's ~$79.0 billion enterprise value requires roughly $5.53 billion of steady-state annual free cash flow, implying roughly $27.65 billion in steady-state annual revenue - about 7x this quarter's annualized run rate ($3.96 billion), and by far the most demanding bar this series has ever calculated for any HOOD quarter.
| Scenario | Key assumption | Implied EV | Implied cash | Implied market cap | Implied price |
|---|---|---|---|---|---|
| Current (Jun 30, 2025 close) | actual market price, for reference | ~$79.0 billion | $4.16 billion | ~$83.1 billion | $93.63 |
| Bear | The Third Circuit reverses the preemption ruling, sports contracts get shut down in multiple states, the multiple normalizes back toward Q1 2025's ~8-9x revenue range | ~$35.6 billion (~9x revenue) | $4.16 billion | ~$39.8 billion | ~$44.8 |
| Base | The legal position holds through year-end without a final resolution, growth continues near this quarter's pace, multiple compresses moderately from the current extreme | ~$47.5 billion (~12x revenue) | $4.16 billion | ~$51.7 billion | ~$58.2 |
| Bull | Federal preemption is affirmed on appeal, event contracts scale nationally, Bitstamp and WonderFi both integrate cleanly, growth accelerates further and the market sustains the current multiple | ~$79.0 billion (unchanged) | $4.16 billion | ~$83.1 billion | ~$93.6 |
A 125% quarterly stock move on top of an already-strong operating trajectory is the kind of gap between price and fundamentals that this series' reverse-DCF framework exists to flag. The Third Circuit appeal of the New Jersey preemption ruling is the single event most likely to move this stock meaningfully in either direction over the next few quarters - a reader holding the stock at this valuation is, in large part, holding a bet on how that specific case resolves, whether or not that's how the position was originally framed.
Robinhood Markets, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025, filed with the SEC. Historical share price data reflects month-end closing prices for the periods shown.