Robinhood Stock Just Dropped 9% | Portfolio Update

Shares of Robin Hood were down a little over 9% in trading on Thursday. And I

wanted to give a quick explanation why this is one of the biggest holdings in the asymmetric portfolio. Obviously, not

a good day for the portfolio and for the stock, but this is actually the reason that I sold shares of the stock earlier in December as I made transactions early in December, which you can find on asymmetric investing, link on the screen

and a link in the show notes. I took

some profits on that big position in the portfolio because Robin Hood has been on an absolute tear. And the simple reason is the company is tied to the trading that goes on on their platform. So if we look at their monthly metrics, you can

see a few concerning things going on.

The biggest concern that I have as a long-term investor is the number of funded customers actually declined in the month of November. That's not what we want to see, especially when the market is going on a pretty good tear

right now. Assets on the platform also

right now. Assets on the platform also in decline. This is going to be a little

in decline. This is going to be a little bit more volatile because it's going to depend on what the valuation of some of those assets are. So crypto in particular has had a little bit of struggle over the past couple of months.

So that could actually lead to some of this decline in the assets on the platform. But the number of customers

platform. But the number of customers declining is a pretty big concern. The

other thing to look at is the metrics for volume traded. So this top left one is going to be the equity volume trading. $22 billion. Now on a

trading. $22 billion. Now on a month-over-month basis, this is a pretty big decline, but from a year-over-year, you're looking at 147 to 202. So that's

pretty solid growth, but we're not maybe not going to have the same outstanding numbers in the fourth quarter that we had in the third quarter when revenue growth was 100%. Same thing happened

with options contract traded $193 billion. That's up year-over-year pretty

billion. That's up year-over-year pretty significantly, but down pretty significantly quarter or month over month. Something similar happened in

month. Something similar happened in cryptocurrencies. So this is the crypto

cryptocurrencies. So this is the crypto number. You can see Robin Hood app uh is

number. You can see Robin Hood app uh is in green. Bitstamp is which is a recent

in green. Bitstamp is which is a recent acquisition that they made is in kind of this white gray color. The amount of transactions just absolutely exploded after the election. That's why you see

these huge numbers over here on the left. So these are actually down now

left. So these are actually down now year-over-year. That means that that

year-over-year. That means that that revenue is going to probably come down as well. The margin book a little up

as well. The margin book a little up just a little bit. Now, the reason that this is something that I have been worried about is because if you look at the amount of revenue that they're generating from all these segments and

in fiscal AI, you can pull in revenue from all of the normal operating segments. Uh I'll take out net interest

segments. Uh I'll take out net interest revenue just for a second here, but look, let's stack these together. And

what you see is when trading is really high, I'm going to go trailing 12 months to just give a little bit better idea what the trends have looked like. When

trading was really high uh back in 2021, these numbers were really good. Then

they fell in large part because options trading declined and cryptocurrency trading declined. But all those have

trading declined. But all those have actually increased pretty significantly over the past year or so that's driven the company's revenue growth along with the non-interest uh revenue fee based revenue for things like credit cards and

stuff like that. But it's very possible that if the market does go through a decline, I'll go back to these annual numbers. So if we go through another

numbers. So if we go through another decline like we had in 2022, revenue could come down. So, you could go from a place where Robin Hood is growing revenue 100% year-over-year to maybe they're actually have negative

year-over-year revenue. And the

year-over-year revenue. And the challenge with that, if we put in some valuation metrics, is the price to earnings multiple and the price to sales multiple have just exploded at Robin

Hood. I'm going to isolate these two and

Hood. I'm going to isolate these two and just show how much they've grown. Let's

just do over the past year. So you can see now the price earnings multiple is over 50 and the price to sales multiple still over 26. So this is a very expensive stock. When you have a very

expensive stock. When you have a very expensive stock, if if operations start to go in the wrong direction, so you're not growing 100%, you're growing 40%, 20%, maybe even going negative, that's what the market's really worried about.

That's why there was such a big reaction to this monthly number today. I don't

necessarily focus a lot on monthtomonth numbers in Robin Hood, but this one was a little bit jarring. So, we'll see what things look like when earnings come out.

We're not going to get those December numbers until we actually get the full quarterly numbers with Q4 numbers and actually the full annual numbers for 2025. But something to keep an eye on

2025. But something to keep an eye on with Robin Hood. Is there something that's broken with their growth mechanism, especially with the number of customers that they have? Something I'm

going to be keeping an eye on here on asymmetric investing. If you want more

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Thanks for watching everybody. See you

here next time.