Prediction: Robinhood Will Pass $500 Billion in Customer Assets in 2027

Robinhood Markets (NASDAQ:HOOD) ended August with $384 billion in Total Platform Assets, its term for everything customers hold on the platform -- up 8% from July and 26% from a year earlier, according to operating data published Sept. 10. The next big round number, $500 billion, sits about 30% away. I think Robinhood gets there at some point during 2027. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue " The reason isn't a bold assumption about markets or a bet on a new product taking off. Customers' own deposits carry the platform most of the way, and the market only has to cover a modest gap. Image source: Getty Images. Deposits do most of the work Customers moved a net $74.1 billion onto the platform in the 12 months through August, a 24% annual growth rate -- though August alone brought in $4.0 billion, just a 14% annualized pace. That money is deposits and transferred accounts, not appreciation: it arrived regardless of what the market did. Hold the trailing pace for the 16 months between the end of August and the end of 2027, and deposits alone add about $99 billion. That lifts the platform to about $483 billion, close but short of the line. However, the trailing 12 months may flatter what is happening now. July's net deposits were $5.6 billion, an 18% annualized rate. From 24% over the trailing year to 18% in July to 14% in August, the pace of deposits has been slowing. Run the slower August rate forward instead, and 16 months of deposits add about $64 billion, putting the platform near $448 billion at the end of next year. In other words, deposits alone leave the prediction short. At either pace, they wouldn't push the platform past $500 billion until 2028 at the earliest. The market has to cover the rest -- roughly 4% of appreciation spread over 16 months if deposits hold the trailing pace, or about 12% if they hold August's. Can the market cover the rest? Total Platform Assets move with the prices of whatever customers hold. That is exactly why the figure can fall in any given month. In July, assets dropped 4% even though customers deposited $5.6 billion. So a rough stretch for stocks or crypto could push the milestone out. Still, the market's share of the work is small. Assets grew 26% over the past year with the market's help, and the prediction needs only a fraction of that. It doesn't require a repeat of the past year's growth. It mostly requires the market to avoid a prolonged slump. A slump is always possible. But deposits do so much of the work that I think the prediction survives anything short of a bad year for markets. The milestone would show up in revenue Customers trade the assets they hold at Robinhood, borrow against them, and park cash alongside them. The tech company earns fees or interest on each of those activities. In the second quarter, that activity added up to revenue of $1.31 billion, up 32% year over year. Net interest revenue, earned largely on margin loans and customer cash, rose 9% year over year to $389 million. And net income climbed 48% year over year, to $573 million. Annualize the second quarter's revenue and Robinhood is running at about $5.2 billion a year, or about 1.4% of the platform's current asset base. Hold that monetization rate, and $500 billion of assets supports about $7 billion in annualized revenue. The rate isn't fixed, of course. Revenue from transactions swings with how actively customers trade, and interest income moves with rates. But at anything near current rates, every additional $100 billion of assets is worth something like $1.4 billion of annual revenue. So, will Robinhood pass $500 billion in Total Platform Assets during 2027? I think so. Deposits at anything near the recent pace carry the platform into the $450 billion to $480 billion range on their own, and modest market gains cover the difference. It would likely take a bear market, or a much sharper deposit slowdown, to keep the figure under the line through the end of 2027. The milestone isn't a buy signal, though. At about $105 as of this writing, the growth stock trades at about 36 times next year's expected earnings. Years of growth like this already look baked into the valuation, so I wouldn't buy shares here. But the asset base should keep growing either way. Should you buy stock in Robinhood Markets right now? 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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Prediction: Robinhood Will Pass $500 Billion in Customer Assets in 2027

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