Robinhood Markets Reports Earnings on Oct. 27. Is It a Better Buy Than Morningstar?

Robinhood reported FY 2025 revenue of nearly $4.5B, up 51.6%, and net income of about $1.9B; Morningstar reported $2.4B revenue, up 7.5%, and $374.2M net income. Robinhood’s faster growth comes with a much higher forward P/E (49.8x vs. 16.8x) and regulatory and litigation risks, while Morningstar offers a more diversified, slower-growing business and returned $400M through buybacks year to date as of June 30. Robinhood’s Q2 2026 event-contract revenue rose more than tenfold, but cryptocurrency revenue fell 38%; the article views it as a higher-risk potential growth choice.

Analysis

The key issue for HOOD is not headline growth but its quality and repeatability. If event contracts are driving transaction revenue while crypto weakens, HOOD may be replacing one volatile activity with another—not yet building the steadier revenue base implied by Gold, interest income, or new services. A regulatory restriction on event contracts could therefore hit both growth expectations and the premium multiple; watch product-level revenue mix and any adverse legal or regulatory ruling over the next 1–3 months. Over 6–18 months, institutional crypto and futures could broaden distribution, but execution and compliance costs may absorb some of the benefit.

MORN offers a lower-multiple counterweight, but its apparent stability is not immunity: AI could commoditize parts of research workflows, while the value of proprietary data and private-market coverage depends on clients continuing to pay for trusted, differentiated information. Buybacks can support per-share results, but do not establish that operating growth is accelerating. The reported valuation gap is potentially attractive for relative value, yet forward multiples alone do not control for HOOD’s higher cyclicality or MORN’s slower growth. No standalone valuation call without current prices, earnings estimates, and comparable revenue-quality data.

Key Decisions for Investors

• Consider a small, beta-aware HOOD-underweight/MORN-overweight pair over 1–3 months rather than an outright HOOD short. Reassess if HOOD’s non-transaction revenue grows enough to offset crypto and event-contract volatility, or if MORN shows accelerating organic subscription growth.
• For HOOD, monitor event-contract revenue concentration, crypto revenue, and regulatory developments. A material restriction on event contracts or renewed weakness in crypto would strengthen the underweight thesis; sustained growth in recurring revenue alongside stable transaction mix would weaken it.
• For MORN, verify organic subscription growth, client retention, and the contribution of PitchBook/private-market products before treating the low multiple or repurchases as a re-rating catalyst. Evidence of AI-driven churn or weaker renewals would invalidate the defensive leg.
• Keep position sizing modest pending confirmation of the supplied forward multiples against current market data and consensus estimates; the article provides no price levels or reliable basis for numeric targets.