Robin Hood (HOOD)

Robin Hood (HOOD) $17.73 HOLD – Its trading at a premium to its peers, will take another look if the price drops significantly. 

Positives

Has a decent strong hold with retail trading community, a preferred broker to those who started trading during the pandemic – First Mover advantage.

Wide offerings in crypto trading and services – crypto is the largest revenue stream.

Negatives

Cyclical, commodity, not much difference between brokerages, at one time commission rates used to be a differentiator, then it was ease of online trading, which was a a small differentiator for Robin Hood when it took of during the pandemic, now every one catering to retail seems to be on par.

• Interest rates from the customers float drive a big chunk of revenue, and a large recessionary rate cut would likely erase most of that revenue segment.

Too much exposure to crypto volumes tank when crypto is down

Valuation

The stock is trading at a premium to its peers like Interactive Broking IBKR, which doesn’t seem justified.