Why ARK Invest Is Re‑accumulating Robinhood Shares

Cathie Wood’s ARK Invest returned to the brokerage Robinhood this month. The firm purchased 28,589 shares of HOOD for its flagship ARK Innovation ETF on Sept. 4, then added another 27,083 shares on the first trading day after the Labor Day holiday.

The purchases mark a reversal for ARK, which had been reducing its Robinhood exposure throughout the summer. The firm sold a sizable block in July and made additional sales as recently as Aug. 26. Although ARK discloses its holdings daily, the filings do not explain the reasoning behind the switch, leaving Wood’s motives unclear.

ARK’s initial purchase came one day after Robinhood’s share price surged about 17 % in a single session. Even after that rally, the stock—trading around $113 at the time—still needed to rise roughly 36 % to recover its 52‑week high of $153.86.

Robinhood released its August operating data on Thursday, two days after the second purchase. The results highlight the business dynamics that likely influenced ARK’s decision, offering clearer insight into why the fund is re‑accumulating the stock.

1. Event contracts now out‑earn crypto

Robinhood’s event contracts (prediction markets where customers trade yes‑or‑no contracts on outcomes such as elections and economic data) are scaling faster than any other product at the company. In the second quarter, event contracts generated $156 million of revenue, up more than tenfold year over year. That exceeded the $100 million Robinhood earned from crypto trading during the period, a line whose revenue fell 38 %.

The growth carried into August. Customers traded 4.7 billion event contracts that month, 15 times the year‑ago figure but 23 % less than July’s 6.1 billion. July’s volume itself was down 5 % from June.

Even though volumes have cooled for two consecutive months from the June peak, a product still running at 15 times last year’s volume represents the type of new‑market growth that a fund like ARK seeks.

2. Assets keep flowing in

The tech‑focused platform ended August with $384 billion in total platform assets, up 8 % from the end of July and 26 % year over year. Net deposits added $4 billion during the month and roughly $74 billion over the trailing 12 months. These inflows continued even when total assets fell 4 % in July to $355 billion before rebounding in August. Funded customers reached 28.6 million, up about 1.9 million over the past year.

3. Customers are borrowing more

Margin balances finished August at $21.5 billion, up 4 % from July and 72 % over the past year. Robinhood’s margin book had already more than doubled over the 12 months through June, reaching $21.6 billion by the end of the second quarter, and balances have remained near that level since.

In other words, users are not merely parking cash on the platform; they are borrowing against their portfolios to invest more. This lending generates interest income for Robinhood in both bullish and bearish markets.

Of course, margin balances can unwind quickly in a market decline, and the associated interest income is sensitive to rate changes. Nonetheless, this deepening engagement is a key factor that makes Robinhood a growth‑stock story rather than a traditional brokerage.

Would I buy the stock, too?

As for whether I would join Wood, I view Robinhood stock as a hold today—not a buy.

The company is executing at a level that would satisfy even a growth investor’s expectations. However, the shares trade at roughly 39 times projected 2027 earnings, already pricing in years of strong growth from the same business lines. For owners of the stock, that valuation alone is not a reason to sell. If the share price were to fall meaningfully from here, or if event‑contract growth continued near its current pace while the equity price remained stagnant, I could reconsider my stance.

Image source: Getty Images.

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