Robinhood (HOOD 2.32%) is perhaps best known for its role in the meme stock frenzy a few years ago. After facing significant scrutiny from investors and regulators, the company has transformed its platform, delivering impressive growth in the process.

Over the past year, Robinhood's stock has surged 381% as management incorporates a number of initiatives to attract more cash to its trading platform. As trading activity soared alongside growing assets, the company capped off last year with record-breaking earnings.

With the stock climbing sharply, is it time to invest in Robinhood, or is it too late? Here's everything you need to know to decide if Robinhood stock is right for your portfolio.

Robinhood had a record year for earnings in 2024

Robinhood has navigated several challenges in recent years, from its role in the meme-stock phenomenon to its payment-for-order-flow business model. While the company has attracted scrutiny from both investors and regulators, the past year marked a significant transformation for the company as it evolved from a gamified trading app to a full financial services provider.

One concern I had regarding Robinhood last year was its seemingly plateaued growth in customer assets. However, it has done an excellent job in attracting customers, with its annual percentage yield (APY) of as high as 5% last year.

Robinhood's Gold subscription service, which charges customers a $5 monthly fee, is one way it rewards its members with higher interest rates. Last year, the company finished the year with 2.64 million Gold subscribers, marking an impressive 86% growth year over year and a 21% increase from the preceding quarter.

Image source: Getty Images.

This subscription provides it with a steady revenue stream. However, a bigger benefit is that these users are significantly more engaged on Robinhood's platform. For example, Gold subscribers hold six times more assets under custody (AUC) compared to regular users and are four times more likely to utilize Robinhood's retirement account services.

Robinhood has introduced retirement accounts tailored for independent workers, including traditional and Roth IRAs. To accumulate more assets, the company offers matching contributions of 1% for all customers and up to 3% for those with Robinhood Gold.

Robinhood's initiatives are paying off big time. The company finished the year with an AUC of $193 billion, a significant increase from $103 billion a year earlier. In the fourth quarter alone, net deposits soared by a record $16.1 billion.

In addition, Robinhood benefited from high trading volume across equities, options, and cryptocurrencies. Cryptocurrency trading surged by an astounding 455% yearly, driven by optimism following Donald Trump's election victory and the potential for more crypto-friendly policies.

This translated into a record year for the company, which raked in $2.95 billion in net revenue, or a 58% growth from one year ago. The company also controlled expenses and posted a $1.4 billion profit, its first full-year generally accepted accounting principles (GAAP) profit as a publicly traded company.

HOOD Revenue (Quarterly) data by YCharts

What's next for Robinhood

Robinhood plans to continue revamping its platform with Robinhood Legend, its desktop offering designed to cater to active traders. This platform provides added tools and aims to attract and retain more active traders. The company is also expanding its financial instruments to include index options (which have certain tax benefits) and futures, giving it further avenues for future growth.

It is also looking to offer its customers event contracts (also known as prediction markets), where they can bet on outcomes from the Presidential election to sporting events. The company rolled out contracts related to the Super Bowl, but only for one day before the U.S. Commodity Futures Trading Commission (CFTC) requested them to take it down.

During the company's recent earnings call, Robinhood CEO Vlad Tenev said, "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."

In a press release, the company said it "will continue to collaborate with the CFTC as we work to roll out a more comprehensive event contracts platform later this year."

Is it a buy?

Robinhood had an excellent year last year and is growing its assets under custody at a very nice pace. The company has turned a GAAP profit in four consecutive quarters in a row, and its strategy appears to be paying off.

Investors considering a position in Robinhood must weigh the valuation and its future growth prospects. Robinhood appears expensive at 38 times this year's projected earnings, especially for conservative investors seeking steady returns.

However, if you can stomach the volatility, Robinhood has gotten back on track, and I'm optimistic about its future growth trajectory. The fintech has done a good job getting more from its customers and continues upgrading to attract more traders and investors to its platform. Therefore, I think it's a solid buy for growth-focused investors today.