Robinhood’s stock price has crashed by nearly 50% from its highest point last year, underperforming the broader market, while the S&P 500 and Nasdaq 100 hover near record highs. HOOD was trading at $77.15, with recent recovery attempts meeting substantial resistance at $93.
While most traders and investors focus more on Robinhood, Interactive Brokers, an old-school broker, has become one of the best-performing companies in the industry. IBRK stock has jumped to $86.10, up over 46% from its low last year.
It has jumped by 440% in the last five years, bringing its market capitalization to over $145 billion. As a result, Thomas Peterffy, its founder, has become the 15th-richest American, with a net worth of over $103 billion. According to Forbes, Robinhood’s Vlad Tenev has a net worth of around $4.7 billion.
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Interactive Brokers has grown into one of the largest players in the brokerage industry. Most customers use it for its lower fees compared to its top competitors, like E-Trade and Schwab. It also offers more features tailored for hedge funds and individual traders.
The most recent earnings report showed that the company’s commission revenue rose by 19% to $613 million in the first quarter, helped by higher trading volume. Trading in stocks, futures, and options rose by double digits during the quarter.
Its net interest income rose by 17% to $904 million, while other fees rose by 10% to $86 million. The company’s customer accounts jumped by 31% to 4.75 million, while customer equity jumped to over $789 billion.
Still, there are signs that Robinhood has a better future than Interactive Brokers. For one, its forward revenue growth is 27% compared to IBRK’s 14%.
This growth is mostly due to Robinhood’s investments in key areas such as real-world asset (RWA) tokenization, prediction markets, wealth management, retirement, and crypto. Robinhood has a net income margin of 41% compared to IBKR’s 14%.
These metrics explain why the company has higher valuation metrics. Robinhood has a forward P/E ratio of 41 compared to Interactive Brokers’ 35.
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