The Smartest Growth Stock to Buy With $500 Right Now
Investing in the stock market is a fantastic way to grow your wealth over time. As investors, it’s essential to create a well-balanced portfolio that holds a diverse range of stocks, each with distinct characteristics. If you’re on the younger side and have the luxury of time before retirement, you might consider being a bit bolder by focusing on growth stocks that have the potential for rapid growth.
One exciting growth stock to watch is Robinhood Markets (NASDAQ: HOOD). This financial technology company has been making waves over the past year, attracting a substantial number of customers and their funds to its platform. Robinhood has expanded its offerings by introducing retirement accounts and tapping into the latest trends in finance. Here’s why now might be a great time to consider adding Robinhood to your investment portfolio.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Robinhood has a strong position among younger generations
Robinhood has established a strong reputation among younger investors like millennials and Gen Z, thanks to its platform, which has made investing accessible and engaging for a new generation. With its user-friendly app and appealing interface, Robinhood simplifies the investment process.
One of Robinhood’s early advantages was being one of the first platforms to offer commission-free trading, fractional shares, and even 24/7 trading on many stocks.
Critics argue that the platform gamifies trading, potentially leading inexperienced users to make reckless decisions. Despite this concern, Robinhood has developed a user-friendly approach to investing, distinguishing itself from older, more complex platforms that would often charge high fees.
Robinhood paved the way, and many platforms followed suit by slashing their fees to stay competitive. Today, Robinhood remains one of the few platforms to offer commission-free options trading and has lower costs on futures and index options, as well as lower margin rates, compared to competitors such as Charles Schwab and E*Trade from Morgan Stanley.
Image source: Getty Images.
Recently, Robinhood has expanded its services to include retirement accounts with a 3% match on contributions. Additionally, the platform offers cash management options with competitive interest rates and debit cards, in addition to its existing capabilities for trading stocks, ETFs, and cryptocurrencies.
Solid growth across key metrics
Previously, Robinhood’s business heavily relied on trading activity, making its revenue quite unpredictable. During the 2021 meme stock frenzy, when trading activity in certain stock names exploded, Robinhood thrived. However, Robinhood’s recent success can be attributed to its ability to adapt to changing market conditions and meet user needs.
One major draw is the platform’s new offerings, including retirement accounts, which help users plan for their future. Additionally, Robinhood has attracted customers by providing attractive interest rates on uninvested cash. Robinhood Gold subscribers can earn interest rates as high as 4%.
This setup not only benefits users by offering them a chance to earn more on their savings, but it also provides Robinhood with a more stable revenue stream. Not only that, but users who subscribe to Robinhood Gold tend to have more assets and engage with the platform more frequently than non-subscribers, creating a win-win situation for both parties.
As a result, Robinhood’s growth in funded customers, platform assets, and Gold subscribers has accelerated in the last year, boosting its revenue and earnings growth in the process.
Image source: Robinhood.
What’s next for Robinhood
Robinhood is expanding its services internationally, starting with its launch in the United Kingdom and European Union. The company also plans to expand into the Asia-Pacific region, with Singapore serving as its base in the region.
The company faces competition from Interactive Brokers, which offers a broader suite of global assets to trade compared to Robinhood’s more limited trading options internationally. Meanwhile, eToro appeals to retail traders with its crypto offerings, the ability to copy trade (a type of social trading where you automatically replicate the trades of another investor), and a broader asset mix.
As Robinhood expands into crypto, options, and potentially other asset classes abroad, it will look to leverage its strong brand and user-friendly experience to capture the next generation of global investors.
In addition to international expansion, Robinhood is also providing customers with event-based contracts, which align with the growing trend of betting markets. These event contracts, also known as prediction markets, allow users to wager on various outcomes, ranging from sports events to political elections.
During a recent earnings call, CEO Vlad Tenev expressed his belief in the future of prediction markets, stating:
I think prediction markets are the future. I think they’re the future not just as an active trading asset, but also news and information. And Robinhood’s going to be right there leading the way.
Is Robinhood right for you?
Robinhood is coming off an excellent year of earnings, which has continued into Q1, and it is growing its assets under custody at an impressive pace. Robinhood is expensive, priced at 46 times its earnings, so it’s not ideal for conservative investors seeking steady returns.
It remains cyclical due to its business model, which still relies strongly on transaction revenue. However, it has expanded and diversified into more reliable income streams and has built a strong base of customer assets.
Robinhood has gotten on the right track, and I’m optimistic about its future growth trajectory. If you don’t mind the volatility, I think Robinhood is an excellent growth stock for investors to scoop up today and hold long-term.
Should you invest $1,000 in Robinhood Markets right now?
Before you buy stock in Robinhood Markets, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Robinhood Markets wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $704,676!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $950,198!*
Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 175% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 23, 2025
Charles Schwab is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in Morgan Stanley and Robinhood Markets. The Motley Fool has positions in and recommends Interactive Brokers Group. The Motley Fool recommends Charles Schwab and recommends the following options: long January 2027 $175 calls on Interactive Brokers Group, short January 2027 $185 calls on Interactive Brokers Group, and short June 2025 $85 calls on Charles Schwab. The Motley Fool has a disclosure policy.