DCF Studio

    HOOD · NMS · Financial Services

    Robinhood Markets, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -15.23

    Market price

    USD 119.82

    Implied upside

    -112.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.

    Current EV/EBITDA of 50.0x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD -15.23-112.7%
    Exit multiple
    USD -19.58-116.3%
    Market price
    USD 119.82

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -7450687326-37253436630FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 6.7bnUSD 9.9bnUSD 14.7bnUSD 21.9bnUSD 32.6bn+48.8%
    EBITUSD -288.6mUSD -429.3mUSD -638.8mUSD -950.5mUSD -1.4bn-48.8%
    NOPATUSD -257.8mUSD -383.5mUSD -570.6mUSD -849.0mUSD -1.3bn-48.8%
    Add depreciation & amortisationUSD 213.5mUSD 317.6mUSD 472.6mUSD 703.2mUSD 1.0bn+48.8%
    Less capital expenditureUSD -136.8mUSD -203.6mUSD -302.9mUSD -450.8mUSD -670.7m+48.8%
    Less increase in working capitalUSD -1.3bnUSD -2.0bnUSD -3.0bnUSD -4.4bnUSD -6.6bn+48.8%
    Free cashflow to firmUSD -1.5bnUSD -2.3bnUSD -3.4bnUSD -5.0bnUSD -7.5bn-48.8%
    Discount factor0.93440.81580.71220.62180.5428-
    Present valueUSD -1.4bnUSD -1.8bnUSD -2.4bnUSD -3.1bnUSD -4.0bn-29.9%
    Present Value Of The ForecastUSD -12.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.898Reported 2.340, pulled toward 1.0 (Blume)
    Cost of equity15.44%Risk-free + beta x equity risk premium
    Cost of debt7.00%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationUSD 107.7bn90.3% of capital
    Total debtUSD 11.6bn9.7% of capital, book value as a proxy
    Tax rate10.7%Effective, capped at statutory
    WACC14.54%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -15.23

    0% of EV

    Terminal value, undiscounted
    USD 0.00
    Terminal value, discounted
    USD 0.00
    Enterprise value
    USD -12.8bn
    Less net debt
    USD 1.2bn
    Equity value
    USD -14.0bn

    Exit at 20.0x EBITDA

    Value per shareUSD -19.58

    24% of EV

    Terminal value, undiscounted
    USD -7.4bn
    Terminal value, discounted
    USD -4.0bn
    Enterprise value
    USD -16.8bn
    Less net debt
    USD 1.2bn
    Equity value
    USD -18.0bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    12.54%-16.00-16.00-16.00-16.00-16.00
    13.54%-15.61-15.61-15.61-15.61-15.61
    14.54%-15.23-15.23-15.23-15.23-15.23
    15.54%-14.87-14.87-14.87-14.87-14.87
    16.54%-14.53-14.53-14.53-14.53-14.53

    Outlined: this model. Green text: above today's price of 119.82. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    EBIT margin-4.3%73.8%+78.2pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.