The S&P 500 Index (SP: INX) soared 16.39% and delivered total returns, including dividends, of 17.88%, according to S&P Global.

The S&P 500 reached a record 6,945.77 points in December before closing the year at 6,845.5 points.

The Nasdaq Composite Index (NASDAQ: .IXIC) did even better, rising 20.36% with total returns of 21.33%.

The Nasdaq Composite hit its peak in October at 24,019.99 points before closing at 23,241.99 points on 31 December.

The Dow Jones Industrial Average Index (DJX: .DJI), which tracks the performance of 30 selected S&P 500 stocks, rose 12.97% and delivered total returns of 14.92%.

The Dow Jones Index closed 2025 at 48,063.29 points, and hit a new record overnight at 49,209.95 points.

By comparison, S&P/ASX 200 Index (ASX: XJO) shares rose 6.8% and produced total returns of 10.32% in 2025.

The ASX 200 rose to a record 9,115.2 points in October before finishing the year at 8,714.3 points.

The S&P/ASX All Ords Index (ASX: XAO), which tracks the top 500 companies, rose by 7.11% and gave a total return of 10.56%.

The ASX All Ords closed 2025 at 9,018.8 points after hitting a record in October at 9,414.6 points.

Top 5 US stocks and ASX shares of 2025

According to Yahoo Finance, the top five US stocks for growth last year were:

1. Flash memory designer and manufacturer Sandisk Corp (NASDAQ: SNDK), up 548%

2. Data storage company and hardware manufacturer, Western Digital Corp (NASDAQ: WDC), up 335%

3. Computer data storage company, Micron Technology Inc (NASDAQ: MU), up 222%

4. Global data storage solutions company, Seagate Technology Holdings PLC (NASDAQ: STX), up 220%

5. US stocks trading platform provider, Robinhood Markets, Inc. (NASDAQ: HOOD), up 183%

The top five ASX All Ords shares for growth were:

1. Anti-drone technology company DroneShield Ltd (ASX: DRO), up 300%

2. Gold miner Pantoro Gold Ltd (ASX: PNR), up 220%

3. Gold explorer Predictive Discovery Ltd (ASX: PDI), up 220%

4. Gold miner Resolute Mining Ltd (ASX: RSG), up 206%

5. Lithium miner Core Lithium Ltd (ASX: CXO), up 206%

Check out the best performing ASX 200 shares here.

What's next for US stocks in 2026?

In its 2026 investment outlook, Morgan Stanley projected that S&P 500 shares will rise to 7,800 points by the end of the new year.

That would represent an annual gain of 13%.

The broker expects US earnings and cash flow growth due to a market-friendly policy mix, interest rate cuts, corporate tax cuts from the 'One Big Beautiful Act', positive operating leverage, and the re-emergence of pricing power and AI-driven efficiency gains.

Serena Tang, Morgan Stanley's Chief Global Cross-Asset Strategist, said:

There will be some bumps along the way, but we believe that the bull market is intact.

Another broker, UBS, predicts the S&P 500 will lift to 7,300 points by June and 7,700 points by Christmas.

UBS said US stocks will be driven by about 10% earnings growth and lower interest rates.

In an article, the broker said: 

In addition to the transformative force of AI, we believe the structural trends of electrification and longevity will also drive equity performance for the long term.

Tactically, we believe AI beneficiaries are broadening out both within and beyond tech, and we see opportunities in companies facilitating grid modernization and supply critical raw materials.

In the longevity field, we expect strong growth in the obesity, oncology, and medical device markets.

Check out which US stocks are most popular with Aussie investors and why.

The post US stocks vs. ASX shares in 2025 appeared first on The Motley Fool Australia.

Stakk shares were up more than 18% to 4.2 cents on Friday, but that followed a 500% jump from 0.6 cents to 3.6 cents on Thursday when the deal was announced, catapulting the company's market capitalisation to $74.7 million.

More than 300 million shares in the company were traded on Thursday and another 52 million on Friday morning, compared with the usual average trade volume of less than 5 million shares.

Stakk announced on Thursday it had secured a two-year master services agreement to deliver Robinhood a solution "encompassing its image capture, authentication, and transaction processing capabilities''.

Robinhood, best known for introducing a new generation of traders to the stock market, crypto and ETFs is, as part of the launch of Robinhood Baking, growing up alongside its customers, moving one step closer to becoming a full financial service company, along the likes of Fidelity, and Charles Schwab. Although the revenue Stakk will generate under this agreement is largely predicated on the success of Robinhood's new banking offering and is therefore unknown at this time, this Agreement is material to Stakk due to the size and scale of Robinhood, and their significant investment in and commitment to their new initiative.

Stakk Chief Executive Officer Andy Taylor said the company couldn't be prouder to add Robinhood as a client.

"The confidence Robinhood has placed in us, at this stage of our journey into Embedded Finance, is a tremendous vote of confidence in what we do and how we deliver," Mr Taylor said.

The agreement can be renewed by mutual consent for subsequent terms of one year.

Second contract win this month

Stakk also announced earlier this month that its agreement to provide services to New York-based Current Financial Inc had been renewed. Stakk will continue delivering a solution to Current for its image capture, authentication, and transaction processing.

Current is a fintech company founded in 2015 that offers alternative banking services through its platform, Current Core.

Stakk said Current aims to deliver services such as faster direct deposits, pay cheque advances, and cryptocurrency services, and has partnerships with firms such as Choice Financial Group and Cross River Bank.

Stakk, previously known as Douugh, said the agreement with Current was worth about $280,000 in annual recurring revenue.  

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Extending its 23%-plus climb during 2024, the S&P 500 started 2025 off with a bang, rising 2.7% in January.

And while some S&P 500 companies failed to keep pace with the index's gain, others soared. Representing a range of industries, the five top-performing S&P 500 stocks all rose more than 20% last month with Robinhood Markets (NASDAQ: HOOD) leading the pack.

1. Robinhood Markets (up 39.4%)

Investors hate uncertainty. So when they gained clarity into how the Securities and Exchange Commission (SEC) investigation against Robinhood regarding securities violations would resolve (Robinhood will pay $45 million in penalties), investors rejoiced, sending the stock soaring.

2. Twilio (up 35.6%)

Twilio (NYSE: TWLO) held its Investor Day on Jan. 23, and investors liked what they heard. The software company, which supports artificial intelligence developers, expects to generate positive operating income in 2025 and more than $3 billion in free cash flow from 2025 through 2027.

3. Constellation Energy (up 34.1%)

Days after the ball had dropped, Constellation Energy (NASDAQ: CEG) powered higher, when it announced its plan to acquire Calpine, an electric utility with robust clean energy assets. The utility stock soared 25% higher on the day of the news.

4. CVS Health (up 25.8%)

Inspired by a proposal from the Centers for Medicare and Medicaid Services that Medicare Advantage payments rise 4.3% on average, investors bid CVS Health (NYSE: CVS) stock higher. An analyst's positive take also contributed to the stock's movement. Evercore ISI hiked its price target to $65 from $60.

5. GE Aerospace (up 22%)

GE Aerospace (NYSE: GE) lifted investors' spirits when it reported strong financial results. Compared to Q4 2023, revenue and free cash flow climbed 14% and 21%, respectively, in the fourth quarter of 2024. The market also celebrated management's auspicious 2025 forecast that includes continued free cash flow growth.

Is now the time to buy these S&P 500 stars?

The top-performing S&P 500 stocks in January are industry leaders that are certainly worth further investigation. Potential investors should ensure that they match their individual investing goals.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post These were the 5 top-performing stocks in the S&P 500 in January 2025 appeared first on The Motley Fool Australia.

Earlier today, the popular online brokerage Robinhood Markets (NASDAQ: HOOD) announced that users can now buy and sell the popular cryptocurrency Cardano (CRYPTO: ADA) on its platform. Cardano is currently the eighth-largest cryptocurrency in the world with a more than $15 billion market cap as of this writing.   

Like most of the crypto market, Cardano's native token ADA has been hammered this year, with its price down roughly 67.5%. With the token now listed on Robinhood, is it time to be bullish?

Why the Robinhood listing is a big deal

Joining Robinhood is a big deal for any cryptocurrency because the platform is actually very picky about which cryptocurrencies are listed. With tens of thousands of cryptos now in circulation, Robinhood has only added 16 that can be purchased and sold by its users through the platform.

The likely reason is that Robinhood is constantly under a great deal of regulatory scrutiny as the first online brokerage that has enabled commission-free trading, which has greatly expanded access to markets for retail traders. On Robinhood's most recent earnings call, CEO Vlad Tenev said that it wants to ensure that each cryptocurrency added to the platform does not get classified as an unregistered security:

This can be dangerous and misleading for customers because they may expect these cryptos to be more decentralized than they really are. We employ a rigorous listing framework, which in the short term may feel like we aren't moving fast enough. But we think this approach will pay off in the long term. 

The other big thing about Robinhood is that it opens Cardano up to a whole new user base and makes it very easy to buy and sell digital assets for Robinhood users who might be new to investing and intimidated by cryptocurrencies.

Robinhood not only has a very sleek digital user interface but also a massive user base. At the end of the second quarter of this year, Robinhood had almost 23 million net cumulative funded accounts and 14 million monthly active users.

Being added to Robinhood has not been an overwhelming catalyst for most cryptocurrencies. Past cryptos added to the platform -- like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash -- did not actually experience a huge price jump when they were included. On the other hand, the meme token Dogecoin jumped nearly 39% after being added to the platform.

The news hasn't exactly helped Cardano today, with the price of ADA actually down 1.7% over the last 24 hours. But we're still in the crypto winter, and there is definitely wider access to popular cryptocurrencies now. Many brokerages are also slashing fees on certain crypto trades to get ahead of the competition.

Should you be bullish on Cardano?

While the Robinhood news today has not proved to be a catalyst so far, I do think you should be bullish on Cardano. It's definitely one of several cryptocurrencies that I think has long-term potential.

Cardano's network can currently process 250 transactions per second, which is already pretty good, but developers are contemplating upgrades to the network that could eventually enable it to process as many as 1 million transactions per second.

Furthermore, Cardano is already operating under a proof-of-stake mining concept, which is much more energy efficient than the proof-of-work mining concept Bitcoin operates under, which uses tons of computing power. Cardano is also a popular landing spot for decentralized applications, and there are roughly 1,000 applications being created on the network.

Ultimately, I think Cardano will rebound along with Bitcoin once the crypto winter eventually ends. While Robinhood is not a catalyst as of this writing, I think it could help broaden exposure and bring more users to the cryptocurrency. The price of the token could certainly go lower in the near term, but in the long term, I think Cardano is a buy and therefore it is a good time to be bullish with the price way down.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

So what

Now what

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Shiba Inu was falling today appeared first on The Motley Fool Australia.

Crypto fans were loading up on Shiba Inu (CRYPTO: SHIB) after Robinhood Markets (NASDAQ: HOOD) announced trading availability on Monday morning. The token initially soared as much as 30% on the news, and 12 hours later Shiba Inu was still trading a healthy 17% above where it was when the news broke.

It's obviously not bad news for Shuba Inu to find its way onto a new exchange. It also helps that Robinhood only had seven digital currencies available before adding four new denominations, including Shiba Inu, on Tuesday.

I'm still not convinced that the initial rally will stick. Let's go over some of the reasons availability on Robinhood isn't a game-changer for Shiba Inu fans.

1. Robinhood isn't as relevant as you might think

There's no denying that Robinhood Markets shook up the brokerage industry a couple of years ago. Would most of the leading platforms be offering commission-free trading otherwise? The problem now is that the platform has lost its grip on its young trading base.

Robinhood lost traction as 2021 played out. There's no shortage of metrics that prove it.

• The number of monthly transacting users slipped from 21.3 million in the second quarter to 18.9 million in the third quarter, and then 17.3 million in the fourth quarter.
• Average revenue per user has fallen in three consecutive quarters. Robinhood has gone from generating $137 per user during the first quarter to $64 in the fourth quarter.
• Assets under custody were lower by the end of the year than where they were at the midpoint of 2021.

The pressure points are everywhere. Fewer people are trading, and people are trading less. That's a bad look for a trading platform, and we haven't even gotten to the most problematic metric.

Robinhood isn't just about crypto. It's also a hotbed for options and stock trading. Stock and options trading has held fairly steady through the final three quarters of 2021, but the same can't be said for crypto. Robinhood reported transactions-based crypto revenue of $233 million in the second quarter, followed by $51 million in the third and $48 million in the fourth quarter. Put another way, Crypto transactions revenue went from 52% of Robinhood's business in the second quarter to just 18% by the end of the year.

2. Every spike is different

If being added to Robinhood's select number of crypto choices is so praiseworthy, shouldn't all of the digital currencies added to Robinhood experience the same pop? In the same 12 hours of Shiba Inu's 17% ascent, two of the three other cryptocurrencies rose less than 4%. One has a higher market cap than Shiba Inu, and the other one is lower.

Is there any reason for Shiba Inu to be the one to surge higher? Is it just because Shiba Inu's a meme coin? There is a bullish case to be made for Shiba Inu; I'm just pointing out that Tuesday's pop is more based on hype than on the sustainable merits accorded to a crypto that's been added to Robinhood. You might also want to check in on the uninspiring returns from some of the seven cryptocurrencies that have been trading on the platform for longer.

3. It's too late for Robinhood to be taken seriously in crypto

Robinhood is trying to make up for the lost time it squandered. It's finally rolling out a crypto wallet to make its digital currencies easier to move away from the platform, but as we've seen in recent quarters, crypto traders have already cleared out.

Investors are smart enough to see through the "free" crypto trading that Robinhood offers, and the folks sticking around the once trailblazing platform tend to be small players these days. Having Shiba Inu coin now available is not detrimental to the crypto, but it's also not going to matter beyond Tuesday's initial buzz.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

The price of Solana (CRYPTO: SOL) had risen as much as 7% over 24 hours at 9:30 a.m. EST before it gave away some of those gains. The popular retail investing app Robinhood announced earlier today that it had added the token to its trading platform.

So what

Robinhood has been slow to add cryptocurrencies to its trading platform, despite strong demand from its customers. CEO Vlad Tenev said on the company's recent earnings call that Robinhood has wanted to be careful not to add tokens that financial regulators might consider unregistered securities. 

This morning, Robinhood added four new tokens, including Solana. The move should increase exposure for the cryptocurrency because Robinhood had more than 17 million monthly active users at the end of 2021. 

Tenev also said that Robinhood has been investing heavily in its crypto capabilities, including by adding features such as crypto gifting and crypto wallets. Robinhood also plans to open crypto investing to international customers later this year.

Now what

This should be a positive for Solana, which now has close to a $35 billion market cap, because it will increase exposure to the token. Robinhood customers have heavily been demanding more tokens on the platform, and using Robinhood is arguably one of the easiest ways to buy and sell equities and cryptocurrencies. This could create more trading activity on Solana.

I also think Solana is one cryptocurrency that merits consideration, considering its smart-contract capabilities and faster transaction times, which make it a viable option for supporting non-fungible tokens and decentralized applications. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Solana is rising today appeared first on The Motley Fool Australia.

Shiba Inu (CRYPTO: SHIB), the top-performing cryptocurrency in 2021, skyrocketed more than 40,000,000% during the year. Meme-stock mania carried over to digital assets, pushing the prices of some tokens to new heights for no fundamental reason. Profit-seeking investors want a repeat performance this year. 

With Shiba Inu down 30% so far in 2022 (as of 9 March), some speculators might be hoping for a quick bull run that turns things around. Wild price swings are normal when it comes to cryptocurrencies, and, as a result, people are tempted to try and time the market. But this could be a losing game, especially with a cryptocurrency like Shiba Inu, whose future is questionable. 

Here's why. 

Where's the competitive edge? 

Shiba Inu is a token that is compatible with the Ethereum (CRYPTO: ETH) network, meaning that it has exposure to the Ethereum ecosystem, which includes availability on popular wallets and decentralized applications (dApps). However, Shiba Inu is constrained by the same issues facing the world's second most valuable cryptocurrency. These center around slow transaction processing times and high fees. 

The developers at Shiba Inu have a layer-2 solution in the works, called Shibarium, to help speed up transactions and lower costs. If implemented without any major hiccups, Shiba Inu's network could introduce gaming and metaverse applications, building much-needed utility into the system. 

Solving the scalability issue is probably the most important topic in the crypto world today, with the smartest minds working on the problem. Some are skeptical that Shiba Inu, with its lack of differentiation and resources, could make a huge breakthrough here. Even if it does, there are already popular gaming and metaverse options bringing in capital. 

Nonetheless, the possible introduction of Shibarium, as well as a potential listing on the Robinhood Markets app, could be catalysts that push SHIB's price higher in the near term.  

Arguably, the viability and staying power of a cryptocurrency depend on its potential to create real-world utility. Shiba Inu seriously lags behind other projects, particularly Ethereum, in that space. Developers and users will continue to be attracted to larger and more proven blockchains, potentially leaving Shiba Inu in the dust. 

Ignore the FOMO 

The fear of missing out, or FOMO, is something that investors constantly struggle with, especially in today's digitally connected age. We hear others talk about making money from investing in certain stocks or cryptocurrencies. We then feel the need to jump right in as well. News flash: Copying what everyone else is doing is not a viable investment strategy. 

The feeling of FOMO is exacerbated in the world of cryptocurrencies, where massive price swings in excess of 20% can happen on any given day. There is no shortage of stories out there about people who became millionaires overnight because of a lucky bet on some digital asset. Like Shiba Inu in 2021, meme tokens definitely encourage this type of behavior.

But as I touched on above, a project like Ethereum could be a much better place to park your capital for the long term. It is already making great strides in introducing various decentralized applications (dApps), like decentralized finance services, which bring in more users. This money inflow leads to more developers working on Ethereum in a virtuous cycle. Can Shiba Inu really compete with this momentum? 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is Shiba Inu ready for a bull run? appeared first on The Motley Fool Australia.

What happened

Shares of Robinhood (NASDAQ: HOOD) sank 10.4% on Wednesday after the online brokerage's third-quarter financial results disappointed shareholders amid a shortfall in cryptocurrency trading volumes.  

So what

Robinhood's revenue rose 35% year over year to $365 million. That was well below Wall Street's expectations for revenue of $431.5 million. It also represented a sharp decline from the $565 million in revenue Robinhood generated in the second quarter. 

Worse still, monthly active users declined 11% sequentially, to 18.9 million. 

Robinhood said the declines were due in part to a downturn in cryptocurrency-related trading activity. The company's crypto transaction-based revenue fell to $51 million, down from $233 million in the second quarter. 

"Looking back at Q2, we saw a huge interest in crypto, especially doge [Dogecoin (CRYPTO: DOGE)], leading to large numbers of new customers joining the platform and record revenues," CEO Vlad Tenev said during a conference call with analysts. "In Q3, crypto activity came off record highs, leading to fewer new funded accounts and lower revenue as expected." 

Now what 

Robinhood expects the muted trading activity to persist into year-end. In turn, management guided for revenue of no greater than $325 million in the fourth quarter and 2021 full-year revenue of less than $1.8 billion.

This muted forecast was unsurprisingly met with jeers from shareholders. Warnings of stagnating growth are often troublesome for premium-priced stocks. Robinhood, which is trading at roughly 20 times sales, might be priced for much greater growth than its new guidance suggests it can deliver. Investors are now resetting their expectations -- and driving Robinhood's stock price down in the process. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Robinhood shares crashed on Wednesday appeared first on The Motley Fool Australia.

Robinhood Markets (NASDAQ: HOOD) has added new users at a high rate over the past few years. For the second quarter, net cumulative funded accounts more than doubled to 22.5 million year over year. But the online trading platform could face mounting competition from PayPal Holdings (NASDAQ: PYPL), which just recently launched a new version of its digital app, complete with shopping tools, bill payment, and financial services, in addition to cryptocurrency trading. 

Here's a look at what PayPal is offering and why it could steal Robinhood's thunder.  

PayPal is building the ultimate financial services app

Right now, PayPal and Robinhood are two different apps, serving two different groups of customers. PayPal's app is centered around daily cash management, where you can pay bills, send money to friends, and browse deals from leading retailers. Robinhood is primarily focused on serving long-term investors, traders, and cryptocurrency investors. In the second quarter, Robinhood saw a larger share of new customers trading cryptocurrency rather than stocks for the first time. 

But make no mistake, both companies are on a collision course going after the same market. Robinhood already offers basic cash management features, such as a debit card and the ability to pay bills and receive direct deposits. It's a sign of where these free trading apps and digital wallets are headed. Juniper Research estimates that the number of people using digital wallets will double to 4.4 billion by 2025. Over time, many people will likely gravitate to one "super" app that does it all -- peer-to-peer payments, shopping, bill payment, and investing.

The problem for Robinhood is that PayPal already has a massive installed base of users to easily promote the financial service features of its own app. PayPal ended the second quarter with 403 million active accounts, along with 32 million merchant accounts, which is miles ahead of Robinhood's 22.5 million. As PayPal continues to launch new features on its app that mirror what these stock trading apps are doing, Robinhood may have a steep uphill climb on its hands. Robinhood's recent momentum stems from more people trading cryptocurrency, but PayPal is one of the few apps that lets users shop at leading retail brands with their cryptocurrency balance. 

What's more, PayPal said it plans to launch new investment capabilities on its app in the coming quarters, along with a high-yield savings account option through Synchrony Financial. PayPal's ability to combine all these features, allowing users to seamlessly use their money to trade cryptocurrency, buy stocks, and take advantage of promotional retail offers in one app might be too much for Robinhood to match in the long run. 

Too much uncertainty in Robinhood's future

Robinhood still has some ways it can differentiate itself. It is starting to roll out 24/7 phone support and prioritizing investing in educational content. Robinhood also introduced IPO Access earlier this year, allowing users to invest in newly listed companies at their IPO prices. It's unclear whether PayPal's new investment offering will be as robust as Robinhood's app or will be a simplified stock trading interface like Square's Cash App.

However, there's nothing preventing PayPal from eventually offering some of the same features as Robinhood. After all, PayPal has got plenty of cash to reinvest in new features. Over the last year, it generated $4.8 billion in profit, while Robinhood reported half a billion in net losses in the second quarter.  

Beyond the looming threat from PayPal, new regulation by the Securities and Exchange Commission is a risk for Robinhood given its reliance on the controversial "payment for order flow" business model.

Robinhood is facing double threats from the SEC and PayPal's new app that could make it more difficult for Robinhood to win new users. I would be cautious about paying a high price-to-sales ratio of 21 for Robinhood shares right now. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Robinhood Should Worry About PayPal's New Payments App appeared first on The Motley Fool Australia.

ARK Invest CEO Cathie Wood seems to have taken the investing world by storm. In 2020, Wood's flagship ARK Innovation ETF (NYSEMKT: ARKK) outperformed the greater market by nearly 9x -- 149% versus 16% -- and earned her Bloomberg News designation as best stock picker that year.

With a focus on disruptive technology, it makes sense that ARK's exchange-traded funds would embrace crypto, but the strong conviction ARK's investments are showing to the sector is still a bit shocking. Last year, Wood assigned a $500,000 per coin price target for Bitcoin (CRYPTO: BTC), one of the most ambitious predictions on Wall Street! Unsurprisingly, ARK is well on its way to creating a Bitcoin-focused ETF.

With the crypto bear market starting to show a rebound, you don't have to wait for ARK's new ETF to get in on the positive returns. Here are three growth stocks Wood owns that are active in crypto's adoption and stand to benefit.

1. Robinhood: Derided as a meme stock, but it has a bright crypto future

Despite being on the public markets for only a short time, upstart online brokerage Robinhood Markets (NASDAQ: HOOD) has made a splash. The first week saw whiplash-inducing volatility, with a disappointing debut, a massive rally that saw share prices more than double in a few trading days, and a correction-level price drop after the company announced a massive follow-on share offering. The app that contributed heavily to the meme-stock trend appears to be a meme stock itself.

Robinhood's envious user growth has partly been due to its tremendous success among younger traders. At one point, the company disclosed that nearly 80% of its user base was under age 35, a highly coveted demographic for financial services firms as these investors have most of their earning and investing lives ahead of them.

In addition to zero-commission trading, Robinhood's crypto capabilities helped the company win this demographic. Robinhood is in high-growth mode. The company disclosed that 2020 full-year revenue grew 245% over the prior year to $960 million. A significant portion of that growth was connected to cryptocurrency trading. The company followed that up with a massive first quarter that saw revenue increase 309% from the prior period to $522 million.

Although Robinhood's opportunity is vast, there are increasing risks in its primary stock trading business. A series of high-profile operational failures -- including trading outages during the GameStop frenzy and data breaches -- have placed the brokerage in the crosshairs of the Securities and Exchange Commission.

Additionally, its primary monetization model of payment for order flow is now being copied by incumbent brokers with larger asset bases, educational materials, and customer support. Robinhood's embrace of cryptocurrency functionality is quickly becoming the true differentiator versus traditional stock brokerage firms, and the company is wise to focus on building out its crypto functionality.

2. Square: Using Bitcoin to improve its flywheel

The ARK Innovation ETF stock has sold off from recent highs, but you can't blame its stake in Square (NYSE: SQ). Shares of the digital payments company have advanced nearly 90% in the last year.

Traditional banking continues to avoid cryptocurrency, which has created an opportunity for financial technology, aka fintech, companies. Square has been aggressive on this front, adding the ability to buy and sell Bitcoin in 2018 through its peer-to-peer financial network Cash App. Bitcoin has been instrumental is helping Cash App's flywheel effect, in which added services increase user engagement.

In the short run, however, it could be Square's other business that powers the company higher. Last year Square's seller ecosystem was decimated by COVID-19. The company's host of card readers and POS systems are popular with smaller business owners like restaurants, coffee shops, nail salons, and bars, which bore the brunt of pandemic lockdowns.

Despite that, Square was able to help its vendors quickly build out their online presence and grow card-not-present transactions. At year-end, seller gross payment volume (GPV) was flat despite significant headwinds. In the most recent quarter, GPV jumped 86% over the prior year, helping to power total revenue growth of 87% (minus Bitcoin).

However, CEO Jack Dorsey has high expectations for Bitcoin, proclaiming it would be the world's "single currency" within 10 years in 2018. He continues to lead by helping to form the Crypto Council for Innovation with Coinbase (NASDAQ: COIN) and Fidelity. Square will be instrumental in increasing Bitcoin adoption.

3. Coinbase: Looking to further institutional Bitcoin adoption

Out of the three companies, Coinbase is more tethered to the underlying price of crypto. Coinbase operates multiple crypto-based currency exchanges, so it indirectly benefits from rising crypto prices, as it serves as a form of marketing for new users looking to trade. Directly, Coinbase uses percentage-based transaction fees, which benefit from higher revenue per transaction when crypto prices are higher.

While crypto has been in a bear market lately, that isn't always a bad thing. As a broker, Coinbase also benefits from crypto crashes (at least short-term). Exchanges tend to do well whenever volatility is high, because fast-moving markets are the biggest driver of transactions. Although prices might be lower, transactions and engagement will increase from people looking to buy dips and "paper-hands" looking to lock in profits or prevent deeper losses.

However, Coinbase is leading efforts to expand the cryptocurrency ecosystem and create more revenue sources than retail trading by increasing institutional adoption. Coinbase recently acquired Bison Trails, now known as Coinbase Cloud. The IaaS platform allows institutions to quickly integrate blockchain infrastructure into their operations. As of the first quarter, Coinbase had more than 8,000 institutions on its platform that conducted 64% of its total trading volume.

With that deep (and still growing) institutional userbase, it's likely Coinbase will be on the vanguard of Bitcoin adoption.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Cathie Wood loves these 3 crypto stocks appeared first on The Motley Fool Australia.

CommSec is one of the most popular brokers in Australia. Because of this, CommSec's trading data gives us a useful insight into the US shares that ASX investors are finding interesting right now. 

So here are the top 10 international shares that CommSec-ers were trading last week. This week's data covers 2-6 August.

Robinhood and Square make their presence known to ASX investors

1. Tesla Inc (NASDAQ: TSLA) – representing 3.7% of total trades with a 60%/40% buy-to-sell ratio.
2. GameStop Corp. (NYSE: GME) – representing 2.9% of total trades with a 93%/7% buy-to-sell ratio.
3. Amazon.com, Inc. (NASDAQ: AMZN) – representing 2.5% of total trades with an 86%/14% buy-to-sell ratio.
4. Apple Inc (NASDAQ: AAPL) – representing 2.4% of total trades with a 65%/35% buy-to-sell ratio.
5. Robinhood Markets Inc (NASDAQ: HOOD) – representing 1.9% of total trades with a 72%/28% buy-to-sell ratio.
6. Square Inc (NYSE: SQ)
7. AMC Entertainment Holdings Inc (NYSE: AMC)
   
8. Advanced Micro Devices, Inc. (NASDAQ: AMD)
9. Moderna Inc (NASDAQ: MRNA)
10. Alibaba Group Holding Ltd (NYSE: BABA)

What can we learn from these trades?

We see some interesting movements in this week's list. Firstly, it's worth noting that the perenially popular shares of Tesla and GameStop remain at the top of this pile, cementing a trend we have pretty much seen all year. Investors remain super-bullish on these two companies as well, in particular with GameStop. A staggering 93% of all GameStop trades on CommSec last week were on the buy side, despite the fact that this original 'meme stock' has slid around 15% over the past month or so.

Tesla also remains popular, albeit less so than GameStop. Tesla shares are up roughly 10% since the start of the month, which may be influencing trading activity here.

But turning to other news, and it was interesting to see e-commerce giant Amazon climb into the top 5 shares this week. Amazon is a regular feature on this list, but usually occupies a spot at the bottom of the table when it does turn up. Perhaps a rare share price pullback in Amazon shares (the company is down more than 10% over the month just passed) is to thank for this.

We also see a strong appetite for US share market newcomer Robinhood. Robinhood had an explosive IPO late last month, rising from around US$35 a share to US$85 by last Wednesday. The company is back down to the mid-US$50 range as it stands today.

And finally, it's also worth noting the presence of Afterpay Ltd's (ASX: APT) potential new overlord Square. Like Amazon, Square is a company that has turned up at the bottom of this table before, but its new presence in the ASX investor's mind looks to have boosted its profile. Square's commitment to list on the ASX if its acquisition of Afterpay goes through may also be at play here.

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Charlie Munger has called Robinhood (NASDAQ: HOOD) a "gambling parlor masquerading as a respectable business." Its founders have argued that they are democratizing finance for the next generation of investors. Whichever side of the debate you fall on, most agree the trading app is shaking up the retail investing landscape. 

Amid the barbs and headlines, its initial public offering (IPO) has revealed many numbers that inform the debate. Here are three that would cause me to think twice before buying shares.

1. More than 50% of customers are first-time investors

This number might be the best argument in favor of Robinhood as a democratizer. If half of its customers are investing for the first time, then the company should be applauded for improving access to the investment world. In fact, there are a few other numbers to bolster that case. The average account size is about $3,500. Compare that to the average account size for E*Trade ($100,000) and Charles Schwab (NYSE: SCHW) ($240,000), and it looks like people who might not have traditionally invested in the stock market are getting involved. 

Dig a little deeper, and there are some flaws in the argument. The median account -- the one with the same number of accounts larger and smaller -- is only $240. And they appear to be much more active than at other brokerages. In the first quarter of 2021, Robinhood users made 60% more trades on average than those at Schwab. That disparity is magnified if you normalize for account size. There's a reason for that: The company gets paid handsomely for all of that activity. In its first quarter, 81% of revenue came from selling those orders -- called payment for order flow (PFOF). 

While almost all online brokerages do it, Robinhood makes almost 100 times more per dollar in the average customer account than Schwab, according to a report by Alphacution Research Conservatory. None of the likely reasons are good for inexperienced investors. First, users are more prone to trading risky instruments like options contracts and cryptocurrency.

The same report shows almost 90 times the number of options contracts traded for each dollar in the customer account compared to Schwab. The company's own filings show its dependence on cryptocurrency (more on that in a bit) while Schwab, E*Trade, and TD Ameritrade don't even offer it. Those orders are worth more to market makers than simple stock trades.

Second, inexperienced investors might be easier to take advantage of during market volatility. Lastly, those accounts could generate so much money because they trade more. Robinhood uses gamification (elements of game playing) to increase user engagement and prompt more transactions. It's the same way a slot machine is designed to keep patrons pulling the handle. And like the one-armed bandit, people who do it a lot tend to lose in the end.

A recent study by academics at several California universities and the University of Washington showed stocks that are extremely active on Robinhood experience a price spike and then a sharp reversal -- a classic sign of speculation. A different study by academics at the Sao Paulo School of Economics and the University of Sao Paulo examined 1,600 Brazilian day traders. It found that only 1% of them made more than minimum wage. The app's most important role might end up being to teach a new generation of investors what not to do.

2. Seventeen percent of revenue is generated from cryptocurrency

In its IPO filing, Robinhood stated that 17% of its Q1 revenue this year was derived from cryptocurrency trading. That's up from just 4% last year. Notably, more than one-third of that was related to Dogecoin (CRYPTO: DOGE). Doing the math, that means 6% of the company's entire revenue was the result of an asset that traded for one-fifth of $0.01 less than a year ago. In total, crypto assets traded on Robinhood grew 24-fold year over year to $11.6 billion.

It's amazing growth but hardly sustainable. Over that 12-month period, the price of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin climbed 490%, 1,820%, and 10,800%, respectively. Cryptocurrency remained volatile in the second quarter, so the company's next earnings report might convince Wall Street that the company can keep it up. But crypto volumes reportedly fell 43% in June. Without continued asset appreciation and trading activity, it's hard to see this large chunk of the company's revenue persisting.

3. The company recently paid $70 million in fines 

The penalty was a settlement with the Financial Industry Regulatory Authority (FINRA) for providing false and misleading information to its customers, as well as allowing them to partake in especially risky trading behaviors. Other charges included failing to tell customers how it made money and not obtaining best-price execution for their orders. The fines haven't dented its ambitions.

Co-founder Vlad Tenev has said the company is considering offering retirement accounts and sees evidence that the majority of its customers practice a buy-and-hold investing strategy. It's hard to make that case with the data that has been made public. It is a natural next step for Robinhood, but it might entice people to bring more of their money into the proverbial casino. It's one thing to actively trade with $240; retirement accounts are a different story. After the previous fines and current review of PFOF by the Securities and Exchange Commission (SEC), I wouldn't expect to see a Robinhood IRA anytime soon.

There are two sides to every story

Despite the red flags, the company has done some good. It is largely responsible for the industry adopting $0 trades, and it's hard to argue that it hasn't opened investing up to more people, especially people who might never have invested before. For that, it deserves praise. It even sold about 25% of its IPO shares to its own customers. But like so many other numbers, they can be interpreted in different ways. 

The company went public at the low end of its projected price range and was reportedly having trouble getting institutional investors to buy shares. The two founders each sold nearly $50 million worth. Although together they continue to own about 16% of the company, inexperienced investors might get the short end of the stick buying shares that much of Wall Street passed on. Deciding to invest in a company is a personal decision, and there are a lot of different reasons to choose one over another. These numbers are three reasons that keep me from making a bet on Robinhood.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 numbers that should shock Robinhood shareholders appeared first on The Motley Fool Australia.

The US-based commission-free trading app was confronted with a bleak first day of public trading. Shares in the company fell 8.37% to US$34.82 after the initial public offering (IPO) had raised close to US$2 billion at US$38 apiece.

Let's take a closer look.

Leading up to IPO

Since rising to prominence during the COVID-19 crash and ensuing short squeezes, Robinhood has been shrouded in controversy. The number of funded accounts on the platform has skyrocketed to 22.5 million as of the second quarter – more than triple the number from Q1 2020.

As account numbers soar, so has revenue for the company. According to its prospectus, Robinhood estimates second-quarter revenue of US$546 to US$574 million. At the lower end that would suggest a 124% rise.

Part of this revenue has been a point of controversy for the trading app company. As revealed in its prospectus, Robinhood generated US$331 million in revenue from payment for order flow (PFOF).

Put simply, PFOF is the compensation a market maker will give to a broker when the broker sends the order to them. While this is not illegal by any means, the company was fined US$1.25 million in December 2019 by the Financial Industry Regulatory Authority (FINRA) for failing to ensure its customers received the best price for orders.

Robinhood's rocky track record

Additionally, Robinhood was sued in a class-action lawsuit a year later for failing to disclose that PFOF made up a substantial part of its revenue.

Given these events, investors and customers have wondered whether the "investing for everyone" ethos of Robinhood still rings true – ironic when the tale of Robin Hood was to steal from the rich and give to the poor.

What else?

There are risks associated with the PFOF revenue model for Robinhood. Currently the Securities Exchange Commission chair Gary Gensler is reviewing PFOF. Likewise, the prospectus outlines regulatory interventions as a risk to revenue growth for the company.

Furthermore, CNN yesterday reported regulators have launched an investigation in CEO Vlad Tenev's lack of a FINRA issued license.

Lastly, Robinhood is valued at a market capitalisation of US$29.32 billion based on its share price.

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