HOOD
Robinhood Markets Inc
Price:  
48.59 
USD
Volume:  
58,024,976.00
United States | N/A
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HOOD WACC - Weighted Average Cost of Capital

The WACC of Robinhood Markets Inc (HOOD) is 7.5%.

The Cost of Equity of Robinhood Markets Inc (HOOD) is 8.10%.
The Cost of Debt of Robinhood Markets Inc (HOOD) is 4.25%.

Range Selected
Cost of equity 6.80% - 9.40% 8.10%
Tax rate 0.90% - 13.90% 7.40%
Cost of debt 4.00% - 4.50% 4.25%
WACC 6.4% - 8.6% 7.5%
WACC

HOOD WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.64 0.81
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.80% 9.40%
Tax rate 0.90% 13.90%
Debt/Equity ratio 0.17 0.17
Cost of debt 4.00% 4.50%
After-tax WACC 6.4% 8.6%
Selected WACC 7.5%

HOOD's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for HOOD:

cost_of_equity (8.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.64) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.