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Robinhood's new Coup: AI-Powered Personalized Investment Advice and Entry Into the Trillion-Dollar Crypto-Derivatives Market

Robinhood is known for its commission-free trading app, but has expanded its service offering to include credit cards and retirement accounts and has impressed with an innovation and acquisition drive this year. The group aims to offer everything to do with finance through digital solutions. CEO Vlad Tenev mentioned that the company is thinking about expanding financial advice, but does not want to offer standardized robo-advice. The latest acquisition of Pluto Capital, an artificial intelligence-based investment research company, could indicate how Robinhood might do this in the future. Robinhood acquired Pluto, which offers customized investment strategies based on clients' needs and financial goals.

Robinhood clients will benefit from advanced data analytics, investment insights and personalized investment strategies as a result of the acquisition. Pluto's algorithms tailor investment strategies to individual client profiles by analyzing factors such as risk tolerance, investment goals and historical behavior.

LLMs (Large Language Models) are used to process and interpret market data in real time. Trends and opportunities should be identified more quickly, giving investors a competitive advantage. Personal evaluations of one's own trading behavior should also be part of this. This should increase the attractiveness of using the Robinhood app and thus its popularity with customers. The stock market boom is also currently playing into Robinhood's hands. In the First Quarter, assets under management rose by 65% to $129.6 billion. Robinhood gained half a million new customers in the first quarter alone, bringing the total number of customers to 23.9 million. With the new Gold credit card, there could even be a significant acceleration in the next quarterly figures. Twice as many customers as before are taking out Robinhood's Gold subscription. The cryptocurrency boom is also playing a decisive role, even though the highly volatile cryptocurrencies weakened in the current quarter.

Robinhood Markets plans to offer cryptocurrency futures in the US and Europe once the $200 million acquisition of Bitstamp is completed, according to yesterday's July 2 report from the Bloomberg news agency. The company aims to launch perpetual Bitcoin futures in Europe and CME-based Bitcoin and Ether futures in the US. Earlier this year, Robinhood acquired a futures broker license from Marex, which holds the necessary license to trade futures in the U.S., according to insiders. The crypto derivatives market is larger than the spot market globally, according to research firm CCData, with monthly derivatives volumes of $3.69 trillion compared to $1.58 trillion in spot trading in May. The group has not yet officially confirmed the project.

HOOD ended Q1 with $5.2 billion in corporate liquidity and investments versus no corporate debt. The expected price/sales ratio of 5.7 for 2024 appears extremely favorable in view of the growth, especially as a positive price/earnings ratio of 67 is already expected this year. However, it should be noted that the company is highly dependent on market developments, as customers are easily attracted in good stock market times, whereas falling prices typically mean falling assets and customer losses.

Conclusion: Robinhood's acquisition of Pluto shows once again that it wants to become not just a trading platform, but a comprehensive financial services provider. This year, the group is achieving this at a pace that no other fintech has. A clear outperformer in positive stock market times with a still favorable valuation!

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