Ark Invest Stock Portfolio: Top 10 Picks

6. Robinhood Markets, Inc. (NASDAQ:HOOD)

Number of Hedge Fund Investors  in Q1 2024: 26

Ark Investment Management’s Q2 2024 Stake: $434 million

Robinhood Markets, Inc. (NASDAQ:HOOD) is a financial services provider that enables retail users to trade equities and other securities. As of May 2024, the firm had 24 million funded customers, which leaves it with a lot of room to grow the user base. Robinhood Markets, Inc. (NASDAQ:HOOD) also has the early advantage in the retail investing market, which only truly started to stretch its muscles during the coronavirus pandemic and through the meme stock mania. However, Robinhood Markets, Inc. (NASDAQ:HOOD)’s main market is primarily cyclical in nature, which means that low inflation and economic growth are key for its fate. This was also evident during the first quarter, since as soon as retail investors’ sentiment for the economy started to improve, its net revenue grew by 40% to sit at $618 million and lending it an average revenue per user (ARPU) of $103. This growth was also fueled by the rising acceptability of cryptocurrency, which is another favorite retail investor security.

Robinhood Markets, Inc. (NASDAQ:HOOD)’s management is also trying to grow high fee membership options to drive recurring revenue. Here’s what it had to say about these during the Q1 2024 earnings call:

“We’re also delivering growth in Robinhood Gold. As a reminder of how Gold subscribers on average compare to our customers overall, in Q1, Gold subscribers had 8 times the [assets] (ph) with an average of over $40,000, grew net deposits roughly twice as fast, and had 5 times the retirement account adoption. Gold ARPU is also multiples of our average customer, which includes annualized recurring subscription revenue approaching $100 million. And in Q1, we grew Gold subscribers to 1.7 million, up 42%, or 500,000 from last year. This momentum has continued into Q2 as we added another 140,000 Gold subscribers in April, more than half of our Q1 growth. Let’s now turn to our financial results. In the first quarter, we generated net income of $157 million, up 5x sequentially as we grew revenues and stayed disciplined on expenses.”