Is Robinhood Stock a Buy Now? Here’s What Crypto Bulls Need to Know

Robinhood's stock just ripped through another earnings cycle—but does this fintech disruptor still have rocket fuel left in the tank?

Crypto integration deepens

HOOD isn’t just a meme-stock relic anymore. The platform’s aggressive push into crypto trading continues to drive engagement—especially among younger, digitally-native investors who treat traditional brokerages like dial-up internet.

Regulatory headwinds loom

Sure, the SEC still hasn’t decided whether it wants to regulate crypto or just complain about it—but regulatory uncertainty remains a persistent overhang. One bad ruling could slam the brakes on HOOD’s crypto revenue stream.

User growth vs. profitability

Active users are climbing, but so are acquisition costs. Turns out, giving away free stocks isn’t a sustainable business model—who knew?

Bottom line: A high-risk, high-reward play

For crypto optimists, HOOD offers leveraged exposure to the digital asset boom without directly holding coins. For everyone else? It’s just another fintech stock betting that regulators will keep napping at the wheel.

Beyond meme status

Robinhood made a splash when it debuted free online trades, attracting millions of users who could easily start trading online. The concept took off but got plenty of negative attention for what people saw as encouraging risky behavior. That culminated in theepisode, when retail investors banded together to create a short squeeze in the shares of the ailing video game and electronics seller.

Instead of putting the brakes on the company's business, this episode made it a household name -- and Robinhood has only grown since then. Today, it has an expanded and profitable business offering many financial services, all with its signature, disruptive style.

Image source: Getty Images.

Trading is still Robinhood's core business, and many of its new services are different kinds of investing instruments, including cryptocurrency and options. But the company is leaning into more traditional products, like bank accounts and credit cards, too, and is launching in new regions. It's catching on and becoming a solid player in finance.

Consider the phenomenal second-quarter results. Revenue increased 45% year over year to $989 million, and net income was up 105%. Funded accounts increased 10% over last year to 26.5 million, and Gold membership, which is the company's premium program, increased 76% to 3.5 million members.

It's moving beyond its products and tapping into the excitement and energy of its user base, and it just announced the launch of a new social media app for its users to be able to communicate about trading. Previously, users gathered in spaces liketo collaborate, where idle and even misleading speculation sometimes was sometimes taken as investment advice. Robinhood is planning for its social media channel to follow an X-style template, but trades will be verified if users chat about them, which will take some of the sketchiness out of the picture.

This is important for another reason: Funded members, the company's main user base, increased 10% year over year in the second quarter, which isn't a huge increase. If Robinhood's edge has been free trades, that edge is long gone. There are countless other brokerages offering free trading today, including almost every large bank, plus many new startups. Robinhood needs to monetize its user base in new ways but also needs another way to stand out.

High gains, high risk

Robinhood operates in some risky markets. Cryptocurrency, for example, may be all the rage today, and it's been like that for a few years already. It may be here to stay, but it may not.

The company's excellent performance also hinges on strong trading activity. The current bull market is driving trading volume, but that could end if the market turns bearish. You have to have a fairly healthy risk tolerance to invest in a company like Robinhood because its CORE products also are risky.

Finally, Robinhood has been a monster stock recently, up 500% during the past year. It trades at a sky-high valuation, which means it's priced for perfection. That's also risky because any error could send it plummeting.

HOOD PE Ratio (Forward 1y) data by YCharts.

In another 10 years, Robinhood could be much bigger and reward investors accordingly. If you believe in its innovative model, you might decide it's worth the risk.

Most investors should probably wait and look for a few more rounds of increasing earnings and durability. I'd also wait for a better entry point before investing in Robinhood stock.