Latest news with #VladTenev
Forbes
11 hours ago
- Business
- Forbes
Inside Robinhood's Crypto-Fueled Plan For World Domination
C rypto financiers might seem unlikely guests at the Château de la Croix des Gardes, a 25-acre Belle Époque villa commanding the Bay of Cannes from its hillside perch. Yet on a sun-drenched June afternoon, Robinhood commandeered the storied estate, famous for its star turn in Alfred Hitchcock's To Catch a Thief, for 'To Catch a Token'—a crypto field day conceived by longtime Côte d'Azur resident Johann Kerbrat, the firm's head of crypto. The spectacle opened with a cinematic flourish: a video of Robinhood cofounder and CEO Vlad Tenev driving a midnight-blue 1962 Jaguar E-Type convertible along the corniche, an homage to Cary Grant's entrance in Hitchcock's film. When the reel faded, Tenev stepped out in real time—decked out in a pinstriped white Tom Ford suit, black-and-white ascot, green attaché case in hand—to greet an invitation-only crowd of more than 300 that included Ethereum creator Vitalik Buterin and top brass from financial heavyweights JPMorgan, Mastercard and Stripe. The theatrics are warranted. Robinhood's stock is trading at $111 a share, an all-time high 384% above last year's levels, vaulting the brokerage firm's market cap to nearly $98 billion and into the ranks of the world's 250 most valuable companies. In 2024, it generated $1.4 billion in profit on nearly $3 billion in revenue and now holds $255 billion in assets, expanding at a 44% net deposit growth rate over the past year. In terms of active or funded accounts, Robinhood, with 26 million, is rapidly gaining share on Schwab, with 37 million, is three times larger than Morgan Stanley's E-Trade and six times larger than Merrill Lynch. Tenev's personal fortune has jumped sixfold in a year to $6.1 billion. Guerin Blask for Forbes The 38-year-old chief executive operates in perpetual motion. In late May, he is in Las Vegas, preaching to 35,000 bitcoiners about how crypto will further disrupt global finance through tokenization—the process of converting assets like stocks, bonds and real estate into digital tokens that can be traded 24/7 on blockchain networks. From there, he bounces to Tampa for a conference for registered investment advisors, and a few weeks later he's in Robinhood's posh Manhattan offices for its annual shareholder address. 'It's New York this week, then France, then the U.K.,' he rattles off before listing more than a dozen Robinhood offices across America, Europe and Asia. 'I have to visit each one at least once a year, and they just keep multiplying.' Despite his boyish looks, including a hair bob and goatee reminiscent of Errol Flynn's 1938 Robin Hood, Tenev these days sounds very much like the seasoned chief executive of a giant financial conglomerate. The upstart brokerage that blossomed from the ashes of the global financial crisis and Occupy Wall Street movement has grown up. It wants to be a one-stop financial firm for tech-native generations who prefer transacting digitally. Within the next 20 years, according to Cerulli Associates, they are expected to receive some $124 trillion in assets, mostly from their Boomer parents. A week before his staged entrance at the French estate, Tenev explained the method behind Robinhood's events. "The pace of rolling out new products has been pretty high,' he said. 'It's a good way to show to the world what we're doing. We have to figure out what story we're telling with each one, and it also really motivates people." MANDARIN ORIENTAL; ROBINHOOD The get-together at the Château marks Robinhood's first-ever international and crypto-focused event, dense with announcements. Starting in July, Robinhood is allowing European users to trade blockchain-based 'stock tokens,' nonvoting derivatives that track hundreds of U.S. stocks and ETFs, including privately owned tech juggernauts SpaceX and OpenAI. The trading will be commission-free, 24 hours a day, five days a week. For U.S. customers, crypto staking—the practice of locking digital assets to blockchain networks like Ethereum or Solana to earn income—will finally be permitted. Robinhood's June acquisition of Luxembourg-based crypto exchange Bitstamp for $200 million will unlock perpetual futures with no expiration on bitcoin and ether for continental customers. To underpin it all, Robinhood is building its own blockchain. 'We as an industry find ourselves at an important precipice,' Tenev told the VIPs fanning away the Riviera heat. 'We have a chance to prove to the world what we've believed all along, that crypto is much more than a speculative asset. It has the potential to become the backbone of the global financial system. We are hoping to turn that from a possibility to an inevitability.' To understand the coup Tenev is planning, it helps to revisit Robinhood's turbulent past. In 2013, Tenev and his cofounder, Baiju Bhatt, two Stanford physics and math grads, saw a world ripe for disruption. After college, the two developed software for giant hedge funds whose high-frequency trading dominated Wall Street. It was a front row seat to these funds' nearly insatiable appetite for trading volume, which they were willing to pay for. Retail investors who were accustomed to paying commissions of, say, $10 or $25 per trade at brokerage firms like Charles Schwab, Fidelity and Merrill Lynch could be a great source of this volume. Tenev and Bhatt built a fun and easy-to-use mobile trading app for novice traders that eliminated account minimums and commissions because they knew hedge funds would pay them to execute their customers' trades. They then marketed their zero-commission platform under the slogan of democratizing investing and rolled it out with the fanfare of a new blockbuster video game. Before Robinhood even launched, its Apple app store waitlist swelled to nearly 1 million people. By September 2019, the incumbents—Charles Schwab, E-Trade, Fidelity, TD Ameritrade (acquired by Schwab in 2020) —eliminated their fees, cementing the upstart's approach as the new industry standard. The triumph, however, didn't last long. In early 2021, after trading on the app exploded thanks in part to pandemic lockdowns and millions of stimulus checks, Robinhood became the focus of a regulatory firestorm during the GameStop meme-stock trading frenzy. Spurred by the Reddit community WallStreetBets, GameStop's stock price soared dramatically—seemingly without regard to the dismal underlying financials. This unprecedented volatility triggered a massive collateral demand from Robinhood's clearinghouse, forcing Tenev to halt purchases of the stock on the platform. Cue user fury, Main Street vilification and congressional grillings, including questions over the suicide of a young Robinhood options trader. But rather than retreat, the GameStop trading debacle—which exposed how outdated, opaque and slow U.S. stock trading is—crystallized an idea Tenev had been mulling. 'Could we actually put stocks on blockchains?' he says. 'My belief was that the value would be in taking stocks 24/7.' Robinhood first tried to modernize legacy systems by partnering with alternative trading platforms like West Palm Beach–based Blue Ocean to extend trading hours. However, these efforts hit a wall. 'I didn't realize how difficult it would be to change these core infrastructure elements because so many things depend on them. Maybe that was a little bit naive,' Tenev admits. Meanwhile, his crypto chief, Kerbrat, was exploring other ways to execute his idea. With U.S. regulators taking a cautious stance on digital assets under the Biden administration, the team took the experiment to Europe, where a rulebook was already in place. 'Sometimes it's easier to start with new infrastructure and build it from the ground up. We believe the technology can scale to any jurisdiction, and over time we'll be able to figure out how to make it available everywhere in the world,' Tenev says, knowing his lucrative trading volume machine could grow exponentially as millions of investors worldwide start trading U.S. stocks like memecoins. While Kerbrat worked on tokenization in Europe, Robinhood was reinventing itself elsewhere. In March 2024, Bhatt, now worth $6.7 billion, exited the company (he stepped aside as co-CEO in 2020) to pursue a new venture in space-based solar energy. Despite lingering customer litigation from GameStop, Tenev was busy introducing a wave of new products—IRAs, high-yield savings accounts, a credit card offering 3% cash back (with 3 million people on the waitlist), a private banking service for cash delivery on demand and sophisticated options tools previously reserved for institutional investors—turning Robinhood into 'a mousetrap to trade anything,' in the words of Brett Knoblauch, managing director at Cantor Fitzgerald. The whirlwind of launches matches its architect's own cadence. In a moment of reflection, the Bulgaria-born Tenev lifts his palms in a what‑can‑you‑do shrug. 'I just wake up, work, eat, work out, go to sleep. My wife doesn't love it when I say this, but I actually prefer to integrate work into personal life as much as possible.' What Tenev says he didn't fully anticipate during Robinhood's explosive growth was how deeply accessible trading resonates with the entrepreneurial spirit. At a private event in Miami last year, the company's top users included not just self-taught day traders but small-business owners and startup founders—people who approach markets with the same DIY mindset that built their companies. This fiercely independent impulse, he believes, is Robinhood's real protective moat: 'Entrepreneurs don't trust other experts to do their stuff for them. They like to figure things out for themselves.' Robinhood is engineered for them—a control panel for those who want to manage their own money without gatekeepers. Tenev plans to dominate next-generation investors in three phases he calls 'arcs.' First, win the active trader market, where the ROI is immediate, as evidenced by Robinhood's current strong results. Medium-term, around five years, he wants to serve the entirety of his customers' wallets, from credit cards to crypto, mortgages and IRAs. Third arc: Build the number one global financial ecosystem, presumably with Robinhood's blockchain as its backbone. Says Tenev, prepping for the next day's shareholder meeting, 'This will be much larger than the first two arcs. The opportunities start slowly but compound over time.' T okenization may be Robinhood's long-term ambition, but its core crypto business is already a juggernaut. In 2024, its crypto revenue reached $626 million, up from $135 million a year earlier, accounting for more than one-third of total transaction-based revenue. In the first quarter of 2025, crypto revenue has already reached $252 million. 'They're eating Coinbase's lunch in the U.S. right now,' says Rob Hadick, general partner at crypto VC firm Dragonfly. In May 2025, Robinhood's crypto volume spiked 36% month-over-month while Coinbase's dipped, Cantor Fitzgerald's Knoblauch notes. Coinbase still owns the institutional market, he concedes ('their offering is much broader and custodial'), but Robinhood's takeover of Bitstamp, finalized in June, handed it 5,000 institutional accounts and additional licenses in Europe and Asia. Tenev and Kerbrat insist Robinhood's approach is fundamentally different from that of crypto exchanges like Coinbase. 'In this industry people talk to you about the advantage of this [blockchain] layer versus this layer and just forget at the end of the day about the end user. We don't want to build a technology just to talk about the technology. We want to build something that people can use on the day-to-day and actually see the advantage compared to the alternative financial system,' Kerbrat says. Micky Malka, founder of Ribbit Capital and an early backer of Robinhood, Coinbase and their European competitor Revolut, says focusing on the Coinbase-Robinhood rivalry is shortsighted. 'To me, the question for the next ten years is how much market share they take from the incumbents. It's not a fight amongst them,' he says. Knoblauch estimates Robinhood's $255 billion in assets under custody will rival Interactive Brokers', which has $665 billion in client assets, within seven years. Next up, Charles Schwab, which the analyst calculates Robinhood has gained share on for 14 straight months. Tenev is also serious about diversifying. The old Robinhood was criticized for being a payment for order flow (PFOF) junkie, dependent on heavy trading volume and the most aggressive Wall Street hedge funds. Transactions still account for 56% of its revenue (down from 77% in 2021), but today Robinhood has ten business lines on track to each generate over $100 million in revenue within two years, according to John Todaro, managing director at Needham & Company. Take Robinhood Gold. What began as a simple $5 per month or $50 per year premium service, offering margin access, professional research and a little extra yield on balances, has evolved into the centerpiece of Tenev's powerful subscription model. Among its current perks: 4% yields on brokerage cash, interest-free margin loans up to $1,000 and a 3% match on IRA contributions. The newly released Robinhood Gold credit card, which offers 3% cash back on all purchases, was just sent to the first 200,000 customers. 'If they get to 15 million users on Gold, you're looking at close to a billion dollars of subscription revenue. It's taking a business that used to be very cyclical to having recurring revenue, then diversifying the overall revenue base,' Knoblauch says. Then there's Robinhood Strategies, Tenev's new hybrid robo-human advisory product gunning for old-school stalwarts like Morgan Stanley and Merrill Lynch in the $60 trillion U.S. wealth management business. For a 0.25% annual management fee, capped at a flat $250 for Robinhood Gold members, customers get tailored portfolios of stocks and ETFs, algorithmically managed and rebalanced with human oversight. Since launching in March, this disruptive new platform has already brought in $350 million. Tenev describes his company's approach to new products as scientific, empowering small teams inside Robinhood to test hypotheses with customers who provide immediate feedback to its initiatives on social networks. 'A lot of companies will just look at what's happening in the outside world and copy it, sort of a competitive benchmarking. When we launch products or new features, we do it because we like to figure stuff out,' Tenev says. Robinhood's recent launch of home mortgages—currently at 6.1% for 30-year fixed plus $500 toward closing costs—is the result of a stealth online pilot it ran starting in June. 'It went all over social media. Then I acknowledged we were running the pilot in a tweet. It was probably one of my most viral tweets of the year.' T enev's tokenization push is a bit of a moonshot, and Europe, which has already adopted many of the crypto road rules still being debated in Congress, is Robinhood's lab. 'The experiment that we're running in Europe is, What would Robinhood look like if it was rebuilt from the ground up entirely on crypto rails? Then we'll see what the pros and cons are and bring the best of that EU app to the U.S. and the rest of the world,' he says. So far the tokenization of stocks is minuscule. xStocks, a new but already leading platform from Switzerland's Backed Finance, has tokenized more than 60 listed equities, including household names such as Apple and Amazon, and made them available on large crypto exchanges like Kraken and Bybit. xStocks has less than $10 million in daily volume. Structural issues abound: These tokens are derivatives backed by assets held off-chain, which means routine corporate actions like dividends, stock splits or other things that might occur over a weekend, when markets are closed, could scramble collateral calculations and risk unintended liquidations. 'Some market maker has to take that risk, and how will they hedge that risk when there is no market open? If they're going to take that risk, they need to blow their spreads and charge people a lot of money,' says Dragonfly's Hadick. 'The infrastructure is not there at the moment on the off-chain side, and the on-chain product is not there yet. . . . I'm worried these initial products are going to be essentially duds.' This hasn't stopped others from jumping in. In June, the Winklevoss twins' Gemini launched tokenized trading with MicroStrategy shares for its EU customers. Coinbase is reportedly seeking SEC approval to offer tokenized stocks, and even Larry Fink, CEO of $12.5 trillion (assets under management) BlackRock, is urging the SEC to approve tokenization of stocks and bonds. Robinhood is going further. Besides public stocks, it's tokenizing private companies and has already announced tokenized shares of OpenAI and SpaceX, each valued at more than $300 billion today. OpenAI has already publicly disavowed Robinhood's product, emphasizing the tokens are not authorized or recognized by the company. 'Nobody, no founder, wants their equity floating around on-chain with holders they don't know,' Hadick warns. Tenev is a weathered veteran when it comes to facing naysayers. 'It's still a little crufty,' he admits, using pejorative coder slang for unnecessarily complex software. 'I don't think the brokers want to make it easy for us to pull their stocks out. But what happens when it becomes self-custody? When you can tokenize and self-custody, you can be independent of the brokerage infrastructure—the same way you can load a crypto wallet on MetaMask, Robinhood or Coinbase, you'll be able to seamlessly use any interface to hold your stocks and trade them in pretty much all instances.' T his is precisely why Tenev is obsessed with making Robinhood his young customers' sole tool for all things related to money. When it comes to retail financial services, inertia is second in power only to compound interest. Customers are inherently sticky, but Tenev knows that the old giants of the financial world, including Fidelity, Schwab and Merrill Lynch, are vulnerable as trillions in Boomer assets are bequeathed to their digital-native offspring. In fact, he thinks his biggest competition will come not from firms like Coinbase or Fidelity but from the Anthropics and OpenAIs of the world: 'They're the ones moving the fastest and doing the most interesting stuff. Though I would say it's too early to proclaim the financial industry being disrupted by ChatGPT.' Early Robinhood investor Malka, whom Tenev calls his mentor and whose firm has already profited on its stake by more than $5 billion by Forbes' estimates, is an unabashed Tenev fanboy. 'Robinhood has a leader who's not even 40, who is extremely AI-native, understands where AI goes, understands tokenization, and he's leveraging those two strategies like very few can,' he says. 'We're just starting to get the right setup to bring the 'internet moment' of money, where anybody in the world can save in the same product. Loans are going to get cheaper because credit underwriting is going to get better. All those things.' Tenev believes Robinhood will ultimately employ AI agents to replicate and improve on the services of high-net-worth family offices, putting a 'family office in your pocket.' AI is so central to Tenev's vision that the former math Ph.D. candidate couldn't resist recently cofounding and becoming chairman of AI startup Harmonic, which he leads with computer scientist Tudor Achim, who previously led autonomous driving startup In July, Harmonic raised $100 million in Series B funding from Kleiner Perkins, Paradigm and Sequoia, valuing it at $875 million. The 'mathematical superintelligence' lab is building an advanced reasoning engine, one that 'guarantees accuracy and eliminates hallucinations.' No doubt a useful feature in the coming age of AI and money. 'It would be pretty amazing to solve the Riemann hypothesis, or one of the other big Millennium problems, on a mobile app,' muses Tenev, referring to the most profound unanswered mathematical questions. 'Rather than observing that, I hope to be actively participating.' Jamie Dimon, Larry Fink and Ken Griffin, take note. More from Forbes Forbes Vibe Coding Turned This Swedish AI Unicorn Into The Fastest Growing Software Startup Ever By Iain Martin Forbes Go Back To The Office, But Bring Your Own Snacks. Blame Congress. By Kelly Phillips Erb Forbes The Best Places To Retire Abroad In 2025 By William P. Barrett Forbes Inside America's Top Small Business Bank By Brandon Kochkodin Forbes You're Not Imagining It: AI Is Already Taking Tech Jobs By Richard Nieva
Business Wire
a day ago
- Business
- Business Wire
Harmonic Announces IMO Gold Medal-Level Performance & Launch of First Mathematical Superintelligence (MSI) AI App
PALO ALTO, Calif.--(BUSINESS WIRE)-- Harmonic, the AI lab that introduced the concept of Mathematical Superintelligence (MSI), today launches Aristotle – the only AI model built from the ground up to be hallucination-free. In a livestream on X, the company released its waitlist ( for the Aristotle iOS app beta, with rollout commencing today. Harmonic also announced that Aristotle is among the first AI models to achieve formally verified gold medal-level performance on the 2025 International Mathematical Olympiad, widely regarded as the world's most prestigious mathematics competition. This places Aristotle at the forefront of advanced mathematical reasoning performance among frontier AI models. Unlike language-based AI prone to hallucinations, Aristotle's use of MSI verifies accuracy – ensuring coherent logical reasoning and transparently flagging errors and inconsistencies. By replacing probabilistic guesses with provable solutions, Aristotle is the most reliable model for high-stakes, real-world applications where accuracy is critical. 'The algorithmic innovations that yielded not just IMO Gold-Medal performance, but formally verified solutions to complex, novel mathematical problems, solidifies Harmonic's position at the leading edge of AI model development,' said Tudor Achim, CEO and Co-Founder of Harmonic. 'We're even more excited to make this advanced AI available to the public.' Aristotle's MSI model is designed to solve mathematical problems at a level far exceeding human capabilities. By accelerating mathematics, the doors open to driving breakthroughs across multiple fields, from theoretical physics to engineering. 'We can't wait for people to start using Aristotle and experience the future of intelligence,' said Vlad Tenev, Co-Founder and Executive Chairman of Harmonic. 'We believe Mathematical Superintelligence may be one of humanity's greatest inventions and we hope Aristotle will consequently contribute to many useful scientific discoveries and engineering inventions in the future.' The Harmonic model will be available as an app for iOS and Android, on the web and as an API. In July 2025, Harmonic raised $100 million in Series B funding at a nearly $900 million post-money valuation. The round was led by Kleiner Perkins with significant participation from Paradigm. Additional investors included Ribbit Capital, Sequoia Capital, Index Ventures and Charlie Cheever. Harmonic previously raised $75 million in its September 2024 Series A funding round, which was led by Sequoia Capital, included significant participation from Index Ventures, and received additional backing from DST Global partners and Nikesh Arora. About Harmonic Harmonic, an artificial intelligence company founded in 2023, is backed by Robinhood CEO Vlad Tenev and led by CEO Tudor Achim. It is developing Mathematical Superintelligence (MSI), the next generation of artificial intelligence which is rooted in mathematics and which guarantees accuracy and eliminates hallucinations. The company is based in Palo Alto, California. For more information about Harmonic, please visit:
Bloomberg
a day ago
- Business
- Bloomberg
Robinhood CEO: ‘Tragedy' That Retail Can't Tap Private Markets
Robinhood CEO Vlad Tenev said retail investors are largely excluded from the 'huge opportunity' available in private markets. Tenev spoke with Carlyle Co-Founder & Co-Chairman David Rubenstein for an episode of Bloomberg Wealth. This interview was recorded July 17 at Menlo Park, CA. (Source: Bloomberg)
Yahoo
4 days ago
- Business
- Yahoo
Robinhood's Lofy Valuation: A Vote of Confidence or Cautionary Tale?
Robinhood Markets' HOOD shares are trading at a massive premium to the industry. At present, the company has a forward price/earnings (P/E) of 67.23X compared with the industry average of 14.81X. Price-to-Earnings F12M Image Source: Zacks Investment Research Further, HOOD stock looks expensive compared with its peers -- Charles Schwab SCHW and Interactive Brokers IBKR. Schwab and Interactive Brokers have a forward P/E of 19.40X and 32.26X, the stock trading at a premium, this has raised a question in everyone's mind: whether the valuation is rooted in optimism over its long-term growth or detached from its current fundamentals. With expanding product offerings and a growing user base, is the market right to bet big on HOOD? Let's find out. Robinhood: A Global Innovative Player Robinhood has evolved significantly since the meme stock frenzy of early 2021, emerging as a serious competitor to established online brokerage players like Interactive Brokers and Schwab. The company intends to become a one-stop shop for building generational wealth align with its goal of becoming an international player, the company has unveiled several products and services, including tokenized U.S. stock and exchange-traded fund (ETF) for European Union (EU) investors and an advanced desktop platform, Robinhood Legend, in the U.K., following its launch in the United States in October 2024. Moreover, in May, HOOD announced an agreement to acquire Canada-based WonderFi Technologies Inc. Besides granting regulatory footing in Canada, the transaction strengthens the company's position in a rapidly growing crypto market. These efforts align with Robinhood's ambition to become a global player as the company looks to expand its presence beyond the Americas and Europe into the Asia-Pacific region. During its first Investor Day conference in December 2024, CEO Vlad Tenev mentioned that the company will set up a new office in Singapore in 2025, which will serve as HOOD's headquarters for the company is likely to launch digital asset trading in Singapore soon, having completed the acquisition of Luxembourg-based Bitstamp, a globally recognized cryptocurrency exchange. The deal provides Robinhood with the requisite regulatory approvals, positioning the company to enter Singapore's expanding digital assets market. HOOD's Business Diversifying Efforts Robinhood has evolved from a brokerage firm primarily trading in digital assets to a more mature and diversified entity, striving to widen its market and reach. Looking at the numbers, in 2021, it mainly relied on transaction-based revenues (almost 75% of total revenues) to generate income. In 2024, this came down to nearly 56%.Other initiatives by Robinhood reflect its ambition to become a comprehensive financial services provider. In March, the company launched Robinhood Strategies, Robinhood Banking and Robinhood Cortex, a suite of new features, to boost the wealth management offerings for its Robinhood Gold members. Further, it launched the prediction markets hub, allowing customers to trade on the outcomes of several major global events. Initially, the hub will be available across the United States through KalshiEX LLC, a Commodity Futures Trading Commission-regulated contracts gained traction when Robinhood launched them in October 2024, just before the U.S. Presidential elections. Similarly, Interactive Brokers has been actively expanding its event contract offerings to capitalize on rising demand. In April, it launched prediction markets in Canada. Like HOOD, it first introduced event contracts in October 2024, starting with the U.S. election in February, Robinhood acquired Gainesville, FL-based TradePMR, a custodial (having $40 billion in assets under administration) and portfolio management platform specializing in services for Registered Investment Advisors. The company gained immediate credibility and resources to cater to wealthier investors seeking advisory solutions. By foraying into the advisory space, the company now directly competes with established players like Schwab and Fidelity in July 2024, Robinhood acquired Pluto Capital Inc. With the integration of Pluto's advanced capabilities, HOOD is set to revolutionize the investment experience for its users. Also, as part of a diversification effort, the company launched a credit card (expanding into the consumer finance space). Cryptocurrencies: A Vital Tailwind for Robinhood Robinhood's focus on the cryptocurrency space, through increased tokenization, enhanced platform capabilities and expansion into EU markets, is expected to drive greater cost efficiency and revenue growth. The company is actively pursuing Markets in Crypto-Assets Regulation (MiCA) licenses, which would enable it to offer crypto services across the European Economic Area, expanding its reach to 27 acquisition of Bitstamp and the impending WonderFi deal align with this broader strategy. Bitstamp's core spot exchange, offering more than 85 tradable assets, will significantly strengthen Robinhood's crypto product suite. Meanwhile, WonderFi brings two of Canada's leading regulated crypto platforms — Bitbuy and Coinsquare — with more than C$2.1 billion in assets under custody. These will enable Robinhood to provide trading, staking and custody the platform diversifies and enhances its offerings, Robinhood's cryptocurrency revenues are well-positioned for growth, supported by increasing investor interest in crypto as both a return-generating and diversification tool. Currently, Robinhood supports many major cryptocurrencies — Bitcoin, Ethereum, Dogecoin, Litecoin, Solana and Toncoin. HOOD Rewards Shareholders In 2024, Robinhood announced a share buyback plan (for the first time) to repurchase up to $1 billion of its outstanding common stock. In April, the company increased its existing authorization by $500 million to $1.5 billion. As of April 30, 2025, approximately $833 million worth of shares remained available for repurchase. HOOD plans to complete the remainder of its total authorization over roughly the next two is on solid ground, with significant cash reserves. As of March 31, 2025, it reported cash and cash equivalents of $4.42 billion. Litigation & Probes Surrounding Robinhood Robinhood operates in a highly regulated industry and is subject to the scrutiny of numerous authorities. This exposes the company to regulatory risks, resulting in hefty fines and restrictions that may affect its growth this month, Florida Attorney General James Uthmeier initiated an investigation into Robinhood Crypto, LLC, a subsidiary of Robinhood, for alleged violation of the state's Deceptive and Unfair Practices Act by falsely promoting its platform as the most affordable one to buy crypto. The company is also under investigation by Lithuania's central bank, its lead regulator in the EU, regarding its newly launched tokenized equity products. Moreover, between 2023 and 2025, Robinhood faced multiple regulatory setbacks, including a $45 million fine in January 2025 for securities law violations and a $26 million FINRA settlement in March over identity verification failures. It also paid $3.9 million in 2024 for crypto withdrawal issues and $7.5 million in 2023 after losing a Massachusetts court case tied to product oversight and marketing regulatory actions highlight ongoing compliance and oversight challenges faced by Robinhood. HOOD's Earnings Estimates & Price Performance Over the past month, the Zacks Consensus Estimate for 2025 and 2026 has been revised upward to $1.31 and $1.68, respectively. This reflects a bullish sentiment among analysts. Estimate Revision Trend Image Source: Zacks Investment Research The Zacks Consensus Estimate for HOOD's earnings implies 20.2% and 28.1% year-over-year growth in 2025 and 2026, respectively. Further, Robinhood shares have surged an impressive 173.65% this year, driven by rising investor confidence in its strategic growth initiatives and a more favorable regulatory outlook for cryptocurrencies. The rally also reflects broader optimism around the mainstream adoption of digital assets and Robinhood's positioning to capitalize on that such, HOOD stock has outperformed the industry's rally of 22.4%. Meanwhile, shares of Schwab gained 30.4%, while Interactive Brokers jumped 46.5%. HOOD's YTD Price Performance Image Source: Zacks Investment Research Making Sense of Robinhood's Premium Valuation Robinhood's premium valuation can be justified by its rapid transformation into a diversified, global financial services platform. The company has moved well beyond its roots in retail brokerage, expanding into wealth management, advisory services and consumer finance. Its growing international footprint has been bolstered by tapping into high-growth crypto and fintech markets. Robinhood's evolving product suite caters to a younger, tech-savvy investor base, while its declining reliance on transaction-based revenue reflects increasing business maturity. Solid liquidity, a $1.5 billion buyback program and robust user growth amid rising digital asset adoption further reinforce investor confidence. Although regulatory scrutiny remains a headwind, Robinhood's innovation-driven growth strategy and expanding global presence suggest that its lofty valuation reflects more than just hype; it's a bet on the company's long-term potential to reshape modern present, Robinhood sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
West Australian
6 days ago
- Business
- West Australian
THE ECONOMIST: The Cryptocurrency big bang is a game-changer that will revolutionise finance
Among the strait-laced denizens of Wall Street, crypto's 'use cases' are often discussed with a smirk. Veterans have seen it all before. Digital assets have come and gone, often in style, sending hype-prone investors in memecoins and NFTs on a ride. Their use as anything other than a tool for speculation and financial crime has been repeatedly found wanting. Yet the latest wave of excitement is different. On July 18th US President Donald Trump signed the GENIUS Act into law, providing stablecoins — crypto tokens backed by conventional (usually dollar) assets — with the regulatory certainty that insiders have long craved. The industry is booming; Wall Streeters are now scrambling to get involved. 'Tokenisation' is also taking off: a rapidly growing volume of assets trade on blockchains, representing stocks, money-market funds, and even private-equity stakes and debt. As with any revolution, the insurgents are euphoric and the old guard concerned. Vlad Tenev, chief executive of Robinhood, a digital-assets broker, says the new tech can 'lay the groundwork for crypto to become the backbone of the global financial system'. Christine Lagarde, President of the European Central Bank, sees things a little differently. She worries that the rush of new stablecoins amounts to nothing less than 'the privatisation of money'. Both appreciate the scale of the change at hand. The present moment holds the potential of something far more disruptive for mainstream markets than earlier crypto speculation. Whereas bitcoin and other cryptocurrencies promised to be digital gold, tokens are wrappers, or vehicles representing other assets. That may sound unimpressive, but some of the most transformative innovations in modern finance simply changed the way in which assets are packaged, sliced and reconstituted — the exchange traded fund (ETF), the eurodollar and securitised debt among them. Today there are $US263 billion ($398b) in stablecoins in circulation, some 60 per cent more than a year ago. Standard Chartered, a bank, expects the market to be worth $US2 trillion in three years' time. Last month JPMorgan Chase, America's biggest bank, announced plans for a stablecoin-like product called JPMorgan Deposit Token (JPMD), despite the long-held crypto scepticism of the firm's boss, Jamie Dimon. The market for tokenised assets is worth just $US25b but has more than doubled in size over the past year. On June 30 Robinhood launched over 200 new tokens for European investors, enabling them to trade American stocks and ETFs outside of ordinary trading hours. Stablecoins allow for transactions that are cheap and fast, as ownership is registered instantaneously on digital ledgers, cutting out intermediaries who run traditional payment rails. This is especially valuable for cross-border transactions that are currently expensive and slow. Although stablecoins are now involved in less than 1 per cent of financial transactions around the world, the GENIUS Act will provide a boost. It confirms stablecoins are not securities, and requires the coins to be fully backed by safe, liquid assets. Retail giants, including Amazon and Walmart, are reportedly considering their own coins. To consumers, these might work like a gift card, providing a balance to spend with the retailer, perhaps at lower prices. That would cut out firms such as Mastercard and Visa, which make a margin of 2 per cent or so on sales they facilitate in America. Tokenised assets are a digital copy of another asset, whether that is a fund, a share in a company or a bundle of commodities. Like stablecoins, they can make financial transactions faster and easier, particularly ones involving less liquid assets. Some offerings are gimmicky. Why tokenise individual stocks? Doing so may enable 24-hour trading, since the exchanges on which the shares are listed do not need to be open, but the advantages of that are questionable. And marginal trading costs are already very low, or even zero, for many retail investors. A lot of offerings are less gimmicky, however. Consider money-market funds, which invest in Treasury bills. A tokenised version could double as a form of payment. The tokens are, like stablecoins, backed by safe assets, and can be swapped seamlessly on blockchains. They are also an investment that beats bank interest rates. The average American savings account offers a rate of less than 0.6 per cent; many money-market funds offer yields of 4 per cent. BlackRock's tokenised money-market fund, the largest, is now worth over $US2b. 'One day, I expect tokenised funds will become as familiar to investors as ETFs,' wrote Larry Fink, the firm's boss, in a recent letter to investors. This will prove disruptive for incumbents. Banks may be trying to get involved with the new digital wrappers, but they are doing so in part because they are aware tokens are a threat. A combination of stablecoins and tokenised money-market funds could, in time, make bank deposits a less attractive product. The American Bankers Association notes that if banks lost about 10 per cent of their $US19t in retail deposits — their cheapest form of funding — it would raise their average funding cost from 2.03 per cent to 2.27 per cent. Although total deposits, including commercial accounts, would not be reduced, bank margins would be squeezed. The new assets may also prove disruptive for the broader financial system. Holders of Robinhood's new stock tokens, for example, do not actually own the underlying securities. Technically, they own a derivative that tracks the value of the asset, including any dividends the company pays, rather than the stock itself. Thus they do not gain the voting rights usually conveyed by stock ownership. And if the issuer of the tokens goes bankrupt, the owners would find themselves in a difficult legal situation, competing with the collapsed firm's other creditors over who should take possession of the underlying assets. Something similar has happened with Linqto, a fintech startup that filed for bankruptcy earlier this month. The company had offered shares in private firms through special-purpose vehicles. Buyers are now unclear whether they own the assets they believed they possessed. It is one of the greatest opportunities for tokenisation that presents the greatest difficulty for regulators. Pairing illiquid private assets with easily exchanged tokens opens a cloistered market toms of retail investors, who have trillions of dollars of capital to allocate. They could buy slivers of the most exciting private companies, currently beyond their reach. This raises questions. Agencies such as the Securities and Exchange Commission (SEC) have far more sway over publicly listed firms than private ones, which is what makes the former suitable for retail investment. Tokens representing private shares would turn once-private stakes into assets that could be traded as easily as an ETF. But whereas the issuers of an ETF promise to provide intraday liquidity by buying and selling the underlying assets, the providers of tokens do not. At a large enough scale, tokens would in effect turn private firms into public ones, without any of the disclosure requirements normally required. Even pro-crypto regulators want to mark clear lines in the sand. Hester Peirce, a SEC commissioner known as 'crypto mom' for her digital-friendly approach, emphasised in a statement on July 9 that tokens ought not to be used to skirt securities laws. 'Tokenised securities are still securities,' she wrote. As such, disclosure rules for companies issuing securities will be enforced, regardless of whether the securities come wrapped in new crypto packaging. Although that makes sense in theory, a plethora of new assets with novel structures means that watchdogs will be playing catch-up endlessly in practice. So there is a paradox. If stablecoins are to be truly useful, they will also be truly disruptive. The more attractive tokenised assets are to brokers, customers, investors, merchants and other financial firms, the more they will change finance, in ways both welcome and worrying. Whatever the balance between the two, one thing is already clear: the view that crypto has not produced any innovations of note can be consigned to the past.
