Intro:
As I sit and watch Robinhood HOOD 0.00%↑ fall 8% due to the DeepSeek drama, I couldn’t think of a better time to write why it will go to $100.
Using Charles Schwab SCHW 0.00%↑ as a proxy, lets see what needs to occur. Note - HOOD would need to reach 1/2 of SCHW MC of 150B to get near $100 per share.
HOOD would need to reach 1/2 the AUC of SCHW
HOOD would need to reach 1/2 of SCHW Revenue
HOOD would need to reach 1/2 SCHW Net Income
HOOD and SCHW PE ratios
2025 Product Roadmap and Catalysts
Let’s dive in.
AUC Growth Rate:
At the current AUC growth rate it will take HOOD approximately 2.77 years to reach 1/2 the AUC of SCHW.
Revenue Growth Rate:
At the current AUC growth rate it will take HOOD approximately 4 years to reach 1/2 the Revenue of SCHW.
Now this is to date but lets reflect on how much Revenue HOOD will generate once it increases its Crypto take rate and the number of crypto assets which are available for trading on its platform. To do this let’s take the Avg. take rate of COIN 0.00%↑ which is 1.7% for retail traders and see the difference it would make on upcoming Q4 Revenues.
Current:
With 1.7% Crypto Take Rate:
Now, I don’t think they will take it to this extreme immediately - but if this was HOODs current take rate on crypto transactions - ignoring all other revenue streams - it would take less than 1 year at that growth rate to catch 1/2 SCHW Revenues. They have been increasing it about 0.1% per quarter up from 0.3% in early 2024 to 0.63% Q4 as a new base rate for smart contracts. But you get the point - there is major room to take home higher revenues here and still be one of the best in the market, in terms of pricing.
Net Income:
You can glean this one from the data above. Since 2021 SCHW net income has only grown 17.1% whereas HOOD went from slightly negative in 2023 to +1B net income in 2024 - that’s like a 10000% increase YoY. This rate change wont keep up - but if it did, it would take less than a year to reach 1/2 of SCHW net incomes.
PE Ratio comparisons
SCHW currently trades at a PE of 27 and HOOD a PE of 89. This will change significantly however as HOOD is expected to report EPS of 0.53 for Q4 2024. With that addition it would bring their PE down to 43 with an annual EPS around 1.09 and a stock price of $46.77 which it’s trading at today. This isn’t a crazy difference considering the growth gap, seen above, between these two companies.
However, let’s look deeper. I am already projecting Q1 2025 crypto revenues to come in around 450M. (150M for January x 3 months)
If nothing else changes that would bring revenue to 1.061B for the quarter - annualized we would be at 4.24B! Putting the annual EPS at around 2.50. This means that HOOD would have to trade at minimum $67.50 by EOY to have the same 27 PE as SCHW. This would not be factoring in any growth rate premium for HOOD.
Keeping a 30% growth rate, which HOOD wants to maintain, lets extrapolate this out while keeping a PE of 27 over the next 3 years.
But this isn’t quite right for a Tech company with low margins and high growth, those usually trade at a multiple of 40x if they have a growth rate near 30%. Let’s see what that looks like….
And there you have it folks, $100 by end 2025.
2025 Product Roadmap and Catalysts:
Let’s just face it, HOOD is also way more exciting, outside of boring fundamental factors. See the roadmap I have created below based on tentative timelines provided by HOOD. This lays out what they have in store for 2025.
Major factors to consider when thinking of the revenue above, none of which I have priced into the growth or revenue numbers:
Futures trading which has an insanely high take rate of 0.50c v. 0.06c to buy a stock.
UK options roll out and Expansion into Asian Markets
AI powered financial agents and possible new membership tiers to access them?
Several special events to keep investor and consumer interests (Gold, AI, Summit, Investor day)
HOOD will continue to innovate and excite, to date, they have not shown us otherwise.
Conclusion:
I think there is a very real possibility of HOOD reaching $100 in the next year. I laid it all out above. The comps to SCHW will not be hard to meet and they show every sign of continued growth with many exciting products and events on the horizon. Base case with no growth priced in, $67.50. If the market remains resilient, $100 is certainly on the table. Beyond 2025 I also believe that HOOD will be one of the first to market tokenized equities on blockchain for 24/7 trading. This will only be for liquid stocks like TSLA 0.00%↑ and AAPL 0.00%↑ but would revolutionize the trading space again, like they have so many times before.
I’m long 70C’s for 16Jan2026. I have 145 contracts and will keep adding. Today was a good day to add.
Please hit the “like” button above if you enjoyed reading the article, thank you. You can also see all of my trades at: https://thetagang.com/mehmehmeh
Share this post