Is It Still a Smart Investment to Buy Robinhood Stock Despite Its 230% Gain in the Past Year?

In the past year, Robinhood Markets (NASDAQ: HOOD) has been one of the hottest stocks among retail investors, with its shares rising more than 230% and its valuation surpassing $66 billion. Despite its impressive growth and profitability, is there still room for more gains for investors who buy the fintech stock today? Firstly, it's hard to argue with the returns Robinhood has been generating. During the first quarter of 2025, the company's revenue rose by 50% year over year, to $927 million. This impressive performance has been consistent with the business's recent trends, even during the challenging 2022 market conditions. As investor sentiment has improved and there's more interest in crypto, Robinhood's trading platform has been more popular than ever. One way to gauge the interest of retail investors is to look at how well Robinhood is doing because it's one of the most popular trading platforms for young and novice investors, providing them with real-time market data and commission-free trading. Robinhood has an impressive 96% customer retention rate, and with it looking to expand into more types of products and services (e.g. credit cards, prediction markets, futures), there is the potential for much more growth ahead. However, despite its fantastic results, there's no doubt that Robinhood's valuation is high. The company has been scaling its business effectively, generating $1.4 billion in profit on revenue of almost $3 billion in 2024, for an impressive profit margin of 48%. Its price-to-earnings (P/E) multiple has been coming down as the business has grown, but it's still at a fairly high 41. The average P/E multiple on the S&P 500 index is less than 24. Investors who buy Robinhood stock today are paying a high premium for the business. It boils down to whether it's worth it, and if you think the growth potential is there, then it might be. In the long run, I believe there will be greater interest in stocks and crypto from retail investors. And with Robinhood establishing itself as a trusted name among young investors, it can be a big benefactor from all of that growth. That's why, even though it has generated some impressive gains in the past year, it still might not be too late to invest in the business. Before you buy stock in Robinhood Markets, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Robinhood Markets wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.