Cathie Wood serves as chief executive officer and chief investment officer of Ark Investment Management. While her reputation is largely linked to her early bullish calls on Tesla and Bitcoin, her exchange-traded funds (ETFs) reveal a new area of interest: fintech.

Instead of investing in traditional bank stocks, Wood appears more interested in the intersection of financial services and technology. Some core fintech positions for Ark include Coinbase and SoFi.

However, through a combination of savvy buys and price appreciation, Robinhood (HOOD -0.14%) has catapulted within Ark's portfolio, becoming the sixth-largest position across all her ETFs. And yet, even with Robinhood shares rocketing about 200% in 2024, analysts at Bernstein still see 110% upside (as of Feb. 24).

Let's assess why Robinhood had such a terrific 2024 and explore how the company is building a strong foundation to support sustained long-term growth.

Robinhood had a fantastic 2024, and...

Financial institutions tend to offer a combination of overlapping products, making it daunting for consumers to choose which platform best suits their specific needs. Robinhood is a relatively new entrant in the financial services industry, so the company has spent considerable time and capital figuring out ways to differentiate itself from legacy banks or brokerage firms.

Some useful metrics to look at to help determine whether Robinhood's investments are paying off include user growth, net deposits, and assets under custody. The table below summarizes these key performance indicators (KPI) from the company's fourth-quarter and full-year 2024 earnings report:

Data source: Investor Relations.

What's most impressive from the figures above is that assets under custody (AUC) almost doubled, and net deposits are on a trajectory to rise more than threefold in just one year. Robinhood's annual percentage yield (APY) and competitive matches for retirement accounts have helped lure customers onto the platform.

However, I think the company has more meaningful assets that have yet to bear fruit -- and I suspect the company's growth is just getting started.

Image Source: Getty Images.

...The company is building a roadmap for long-term success

During the past few years, Robinhood has made a flurry of acquisitions. While many of these deals came with hefty price tags, they've also helped investors get a glimpse into management's vision for what Robinhood could really become down the road.

In June 2023, Robinhood acquired a credit-card startup called X1. Not long after, the company announced the launch of its own credit card, Robinhood Gold. Since its debut about a year ago, Robinhood Gold has amassed 2.6 million subscribers (nearly 10% of the company's funded customer base).

In addition, Robinhood announced two large acquisitions last year. In June, the company said it was acquiring Bitstamp in an effort to push further into crypto investing. Of note, the Bitstamp deal is expected to close during the first half of this year, pending regulatory approvals.

Then, in November, Robinhood shelled out roughly $300 million to acquire TradePMR, a move the company made to fast-track its entrance into wealth management. These deals are savvy moves, as Robinhood now has the opportunity to enter new pockets of the financial services realm while also cross-selling additional services (including Gold subscriptions) to new customers gained through the acquisitions.

Is Robinhood stock a buy right now?

As of this writing, Robinhood shares are hovering near their highest price-to-sales (P/S) levels in three years.

HOOD PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.

Although this could suggest that Robinhood stock is getting pricey, I actually think the valuation expansion during the past year is warranted. The macroeconomy has shown signs of improvement, underscored by cooling inflation and tapering interest rates, so it's unsurprising that people have started investing more of their disposable income again.

To me, the rebound in Robinhood stock shown above actually makes sense. The shares have started to witness new life congruent with several consecutive quarters of robust growth across the top and bottom lines. Furthermore, given that the company is still integrating new platforms into its ecosystem, I think Robinhood is in the early stages of entering a new growth phase as it builds a broader financial services application.

In my eyes, Robinhood is a compelling buying opportunity right now for investors with a long-term time horizon.