Robinhood's Meteoric Rise Sparks Valuation Concerns and Risk Worries

Rozinhood has made significant strides since its founding in 2013. The company's free trading model changed the brokerage industry, and it now offers a range of products including cryptocurrencies and prediction markets.

In its first earnings release after going public in 2021, Robinhood reported $102 billion in custody. This figure has grown rapidly over the years, reaching $307 billion in the first quarter of 2026.

The company's valuation is a concern for some investors. With a price-to-earnings ratio of 45x, it is significantly higher than its peers Interactive Brokers (IBKR) and Charles Schwab (SCHW), which have P/Es of 39x and 18x respectively.

Rozinhood's customer base may also be taking on more risk compared to its established peers. The company's focus on new investors, particularly those interested in prediction markets, has led to a 47% decline in cryptocurrency-related revenue in the first quarter of 2026.