Buffett Brain · Research note
Score updated 28 Oct 2026 · analysis from 7 Sept 2026
HOOD· Financial Services
Robinhood Markets
Robinhood's high gross margin of 82.3% and robust financial health contrast sharply with a high P/E of 36.6, raising valuation concerns.
Buffett fit
Partial fit
Owner
50
Durability
62
Management
77
Price
6
Score updated 28 Oct 2026 · analysis from 7 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned 100% of Robinhood, the focus would be on maintaining its high of 82.3% while expanding the user base to drive revenue growth.
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Robinhood's durability is in question due to its -6.8% 5-year average and the fact that it hasn't been profitable every year in the last five.
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Robinhood's management has maintained a relatively stable share count with a CAGR of 0.7%, and a yield of 0.44% indicates some shareholder return focus.
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The valuation of Robinhood at a of 36.6 and an yield of 2.34% is stretched.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 182.3% is top-quintile in the sector.
- 2Revenue CAGR of 25.29% indicates strong growth potential.
- 3Debt/Equity ratio of 0.00 implies no reliance on debt financing.
- 4Interest coverage of 97.0 shows strong ability to meet interest obligations.
Concerns
6- 1 of 36.6 prices in high growth expectations not yet proven sustainable.
- 25-year average of -6.8% is below top-quintile sector performance.
- 3 of 46.3% is below the sector's top-quintile cutoff.
- 4Lack of consistent profitability over the past 5 years.
Price history
$94.56+170.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Robinhood operates a financial services platform allowing users to trade stocks, ETFs, options, gold, and cryptocurrencies. The company generates revenue through transaction fees, interest on uninvested cash, and premium services. With a of 82.3%, it's clear that the business model is capital-light. However, the unit economics are challenged by the need to maintain user growth in a competitive market.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 28, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Financial Services
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