From Yahoo Finance · · 2m
Cathie Wood buys back into Robinhood
ARK dumped Robinhood all summer, then reversed course in September. Here is what the numbers behind the buy look like.
In brief
ARK dumped Robinhood all summer, then reversed course in September. Here is what the numbers behind the buy look like. Robinhood's growth story now rests on prediction markets, a fast-growing asset base and a margin book that has nearly doubled, but at 39x 2027 earnings the price already assumes all of it. Originally…
ARK goes back in
ARK Invest bought 28,589 Robinhood shares for its flagship Innovation ETF on Sept. 4, then added 27,083 more on the first trading day after Labor Day.
A reversal, unexplained
ARK spent much of the summer selling Robinhood, unloading a big block in July and selling again on Aug. 26. Daily trade disclosures don't include reasoning, so Wood hasn't said what changed.
Buying after a 17% pop
The first purchase landed one day after the stock jumped about 17% in a session. Even so, at roughly $113 it would need another 36% to reach its 52-week high of $153.86.
Prediction markets out-earn crypto
Event contracts brought in $156 million of revenue in Q2, up more than tenfold year over year. Crypto trading brought in $100 million, down 38%.
“a line whose revenue fell 38%”
But volumes are cooling
Customers traded 4.7 billion event contracts in August, 15 times the year-ago level but 23% below July. July's 6.1 billion was already down 5% from June's peak.
Money keeps arriving
Platform assets hit $384 billion in August, up 26% year over year, with $4 billion of net deposits in the month and about $74 billion over 12 months. Funded customers reached 28.6 million.
Assets are the engine
Trading, margin lending and interest on customer cash all run off that base. A quarter more assets than a year ago means more to monetize whatever product happens to be hot.
“no matter which product is popular in a given month”
Customers borrowing hard
Margin balances closed August at $21.5 billion, up 72% in a year. That lending earns interest in busy and quiet markets alike, though balances can unwind fast in a selloff.
“They're borrowing against their portfolios to invest more.”
A hold, not a buy
At about 39 times projected 2027 earnings, the price already assumes years of strong growth. A meaningful drop, or event contracts scaling while the stock stalls, would change that.
“I view Robinhood stock as a hold today, not a buy.”
What matters most
Robinhood's growth story now rests on prediction markets, a fast-growing asset base and a margin book that has nearly doubled, but at 39x 2027 earnings the price already assumes all of it.
