Robinhood Stock is a Goldmine 10x Stock | But... Be Warned.

well good old Robin Hood is back at it

again yesterday with an over 1 hour long

announcement announced not only uh

banking coming to you via delivering

cash to you but also some interesting

advisory Concepts and I want to talk

about Robin Hood's stock as an

investment so let's start there and then

I'll get into the announcements because

you may have already heard some of the

announcements otherwise we'll cover it

in just a moment the first thing that I

like saying about Robin Hood when I look

at the data for Robin Hood is I like

seeing the

unrestricted

unsegregated cashola the cashola in the

bank now this company in my opinion has

always been cashr we saw it when it was

$7 they've been a cash-rich company they

think they're pretty dang good at

handling their finances they also just

don't have long-term debt I mean nominal

over here other non non-current

liabilities are sitting at you know 91

million bucks but they've got 10 billion

in in current liabilities but most of

those being uh essentially segregated

assets so so assets that you owe your

customers because they deposit them with

you for cash deposits or yield or

whatever the broker dealer world makes

it a little harder to analyze how much

cash a business has like Securities

lending uh or uh these fractional share

repurchase obligations they're the

harder balance sheet now this on this

left side here is 2023 and I want you to

see the difference because the the cash

over this last year their cash has only

decreased by about 500 Millies and their

current liabilities have moved up and

that's because their user growth is

exploding and that's before we really

get into some of the serious juice of

the business so we've got a business

that's got a good chunk of dough in cash

let's take a look at their cash flow

before we get to their Deb income so we

can see if that size is increasing or

decreasing in 202 uh3 their cash flow

increased by about 1.1 billies but over

here we actually decreased by about 157

mil in 2024 and when we look at free

cash flow it's roughly about 170 mil so

consider this you have a company with

about $4 billion of cash divided by

about 170 gives you about 23 years of

cash burn in a free cash flow point of

view so point is really cash-rich

company and what's the what that's

enabling them to do along with a stock

that's moved up is it's allowing them to

invest a lot in my opinion in new

products features and R&D and this is

what I think is really interesting

because if you actually go to their

financial statement even though they're

coming out with all of these new

features which again we're just going to

hit in just a moment their technology

and development costs have actually

declined substantially from 2022 off the

top of my head we're probably down about

8% from 2022 and we're only up maybe 1

and a half% from 2023 in Tech expenses

Vlad has gone in here with a chisel and

has carved this business to the nuts and

bolts of efficiency he doed Robin Hood

before Doge was a thing they went from

operation expenses of $249 million down

to12 this guy's a top G and then he's

thrown all of it into marketing

basically look at that they almost 3x

their marketing while cutting their

operations expenses in more than half

it's pretty dang impressive and if you

look at GNA their administrative side

you've also seen a collapse in the GNA

expenses by a little bit more than half

that's pretty impressive and that's one

of the reasons they actually have

earnings now now what makes Robin Hood

so interesting well it's like to

me extremely profitable first of all in

options and crypto okay let's be real

options and crypto that's where these

folks make money now I'm not exposed to

the stock so it doesn't matter to me if

it goes up or down but I want to talk

about Robin Hood as sort of like the

future of banking because that's really

the direction that they're going in

first of all they have the cash to play

this game they've got about you know 12%

of their companies in cash it's about a

$40 billion

company it used to be worth a lot less

you know during some of the pain of 2022

and I think there's a chance that can

happen again in fact if there is a

larger stock market correction Beyond

kind of what we've already seen in the

NASDAQ which is really nothing right

we've had a little haircut over here but

if we get back into into something like

a 2022 season where you have you know a

year of downtrending NASDAQ stocks uh or

13 months Robin Hood will probably

perform very poorly mostly because they

make such a bulk amount of their money

on options and crypto which both of

those being significant risk assets and

being tied to trade volumes will

probably suffer in recessionary

environment but I think that could be

one of the most beautiful buying

opportunities along with Restoration

Hardware which trading for like a half

Peg and has is is making incredible

Investments they will get destroyed in a

recession stockwise but they are

building a company of the future that

and I actually think a lot of this like

oh it's so expensive stuff is going to

go away for Restoration Hardware because

I think they're going to end up turning

into like the chip and Joanna games of

the Gen Z and Millennial populations who

move again once real estate gets moving

again probably you know in a couple

years after we get through whatever this

recession drama is or not but Robin Hood

could suffer just like RH during that

time and I think it becomes a buying

opportunity in part because what they're

doing is they're trying to do what every

single Bank should be doing but they're

not actually

restricted uh to the level that uh that

larger banks are see under the dodf

Frank regulations companies that are

part of it especially your big four JP

Morgan Bank of America City and Wells

Fargo they're really restricted with a

lot that they can do in terms of lending

a lot that they can do in terms of new

options or features for their customers

because banking regulation is really

really tight in fact most people say you

don't want to invest in a bank or own a

bank you want to use a bank so you

usually want to be separate from a bank

but fintech and lending has big dollar

hollers this is where you're seeing

rocket mortgage tie up with a red fin

and I think it's a brilliant deal by the

way very very smart for Rocket mortgage

they're getting red fin at a seal I

think somewhere around 1.4 billion bucks

or whatever I mean it's a it's a fart

for the valuation of what uh you know

rocket mortgage is which is also about a

$40 billion company another one that

after the poopy doopy we go through

should do very very well uh on the up

swing but when you look at Robin Hood

and some of their latest announcements

this idea of delivering app to you it's

not about oh okay you you don't want to

go to the ATM because you don't want to

leave your house or your office or

whatever to go pick up $500 in cash so

you could go to the strip club later or

you could go on a vacation and you you

know Uber basically EUR to yourself or

whatever all that like the the service

of this I think is brilliant but what

it's doing is it's showing that Robin

Hood is really like the financial app of

the future it's the app where you go to

incorporate your net worth your checking

account your savings account uh you know

your children's retirement funds it's

really Marketing in a way that M1

Finance wishes they could Market uh in

fact a lot of what uh you know Robin

Hood's announcement uh was about in my

opinion borrows from what M1 Finance has

done for quite a while this idea about I

mean they literally took the pies idea

to allow you or enable you to invest in

these sort of like pies right uh and

they'll sort of like Auto rebalance

these or whatever for you this is

exactly what M1 Finance has done for

years but Robin Hood has the marketing

it's absolutely brilliant because I

don't think that they're necessarily

going to earn a ridiculous amount

rapidly on fees but I think they're

going to get a lot of users using it and

as they get the AUM the fees will will

be remarkable for the company because

think about it this way Robin Hood's

announcement is that if you use their

you know Financial advisory Services

which it's not like you're going to have

a personal financial advisor you can't

pay for that with $250 a year of Maximum

fees but what you've really done is you

5x the revenue for a gold customer and

remember Robin Hood makes a lot of money

off options in crypto but it's not

recurring Revenue it doesn't get you

through a downside what gets you through

a downside is that gold subscription

people forgetting that they're paying $5

a month for Robin Hood gold uh to get

you know their investing analytics or

margin or yield on cash deposits or

whatever that's worth 60 bucks a month

well $250 a month a year rather sorry

that's worth $60 a year $5 a month $60 a

year $250 on top of that for sort of

unlocking their advisory opportunities

you know talking like autofilling your

tax return

brilliant uh you know have a question

ask a CPA it's sort of like into it

support you know they'll have to

massively expand their customer support

base but they're the company that

pioneered the 24hour I think it was the

247 call center have questions about how

to trade options call them okay do the

same thing with taxes do the same thing

with financial advisers you know just

anybody who's an adviser can look at

your stuff and give you an opinion it's

what Sofi has by the way done for years

Sofi has actually provided free

financial advisors for years because the

idea isn't to sell you Financial advice

the idea is to get you to pay a little

bit more per

month you know 25 bips of your AUM up to

$250 Max per year roughly 5x in what

Robin Hood's revenue is off of you

without you trading see they got the

Traders by the balls as any trading

platform does options are very

profitable crypto spreads very

profitable a lot of money to be made

there but there's a limit to how much

people are going to trade in a downturn

there's a limit to how much people are

going to trade in an upside as well

because not everybody trades but getting

that long-term investor who's just going

to park their money in your app and sit

there and not realize that that 300

bucks or whatever a month you're paying

compounded by you know many millions of

users is brilliant like this this is so

smart for not only the downturn times

but also the longterm JP Morgan wishes

they could do an app like Robin Hood C

can JP Morgan buy Robin Hood I I mean JP

Morgan not not that Robin Hood would

ever be open to JP Morgan is A700

billion doll company JP Morgan should

buy Robin

Hood uh you honestly just but I don't

know once that happens then all of a

sudden you have a bank holding company

owning a fintech and you ruin all the

fintech aspects of it anyway so they

can't The Regulators have JP Morgan by

the balls where Robin Hood can do

whatever they want in the fintech space

but they're not screwed by a bank

holding company kind of brilliant

so Robin Hood is really uniquely

positioned for this next downturn uh

they enormous amount of

cash rigorous discipline in cost cutting

and these announcements over uh uh you

know investing into various different

exchange traded funds that they autom

manage for you you know talking to a Tax

Advisor uh through the app included in

this net worth reports spending controls

for your children creating starting the

process of creating a trust right from

the app brilliant uh send cash

internationally through the app to

friends on the app it's sort of their

version of zel brilliant it's like the

blue text message for

fintech uh you know book travel driver

tickets through the app whatever that's

a little bell and whistle nobody really

cares about that but what Robin Hood's

missing right now and if I had a message

to Robin Hood it would be really need to

get into business accounts and then

after that you could you know expand

your lending opportunities like credit

lines for businesses but I think there

are a lot of small businesses out there

right now especially in this moment in

time where people are suffering that

would love a new banking relationship

like what Robin Hood offers uh and so

for me uh it's not a buy at this price

but boy if they get cheap again which I

think they will if we go through this

economic poopy doopy that I think we're

going through or about to go through uh

I I'm I'm pretty excited about the

company the company itself fantastic POV

let's do valuation on them quickly uh

the valuation of the

hoodles so right now we're sitting at

39.2 billies we don't have a cash

concern we love their pricing power we

uh so you know I'm always a big fan of

of the the foundations right no

bankruptcy risk pricing power uh and

then a low valuation and I like to be in

a position of uh low enthusiasm we're in

a low enthusiasm time I think we'll be

in a much more low enthusiasm time when

when folks start realizing crap we could

be in in for an economic slowdown that's

worse than expected I hope not but it

could be uh but as far as the valuation

right now if I look at their Buck

47 of projected income divided by the

current price or current price 4427

divided by a buck 47 come on Kevin 4427

divided by a buck 47 puts me at 30 times

and the growth that the company's

expecting Wall Street is not seeing the

growth I think Wall Street is way way

discounting this growth for this company

they only see 26.4% growth over the next

four years that works out to 6.6% on a

growth rate that's crazy that's so low

for this company I don't buy it but

that's what what is currently currently

estimated puts the company at 1.73

divided by 6 it's trading for a 4.2 Peg

so right now on a PEG ratio basis is

ridiculously overvalued partly because

wall Street's estimates are very low for

it but the point is when with those low

estimates uh Robin Hood stock aligns

with like a 2.4 Peg so if it's trading

for like $22 or

less this this is a this is the Bank of

the future especially with the

regulatory Tailwinds that the company

has Rel you know thanks in part to to

Trump's deregulatory push like Trump's

deregulatory push really won't become

evident probably for the next four years

like the seeds for the next deregulation

bubble are being planted now I agree

with musk we over regul ated now but the

seeds of the next 2008 are being planted

now with the deregulation that's coming

I don't know what the consequences of

that going to be you know in 10 years we

could talk about a recession again we

still have to get through this one first

maybe uh you know I'm like 70% on it but

uh but boy this I have to say team Vlad

team Robin Hood fantastic job and and

out of the other finance apps that are

out there uh there's some that I like

you know like Public's gotten really

good they're given them Robin Hood uh

somewhat of a run for their money Sofi

is incredible

um it's still torn on where I stand on

like the

mumo uh or whatever uh M1 Finance I I

wish I wish they could Market themselves

better uh there's so much opportunity

there but uh because that's a great

application as well and they're doing

great things but nobody knows I don't

see any where's their marketing so

please call me so I could so I can help

you like I'll privately give you my

opinions you don't even have to pay me

but I I just I feel bad and one's

getting left behind but anyway very cool

so some of my thoughts on Rob why not

advertise these things that you told us

here I feel like nobody else knows about

this we'll we'll try a little

advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

your take