Futu (FUTU): A Discounted Alternative to Robinhood in the Evolving Retail Trading Landscape

The retail trading sector has undergone a seismic shift in recent years, driven by technological innovation and the democratization of financial markets. Among the key players, Futu Holdings Limited (FUTU) and Robinhood have emerged as two of the most prominent platforms, each adopting distinct strategies to capture market share. However, a closer examination of their valuation metrics and growth trajectories reveals a compelling case for Futu as a discounted alternative to Robinhood, particularly for investors seeking long-term exposure to the evolving retail trading ecosystem.

Valuation Analysis: A Significant Discount to Peers

Futu is currently trading at an 11.4x 2026e price-to-sales (P/S) multiple, a valuation that starkly contrasts with its global peers and highlights its potential undervaluation. This multiple is particularly striking when compared to Robinhood's recent performance, which, despite its Gold subscription strategy, trades at a premium to Futu. For context, Robinhood's Gold offering-priced at $5 per month-has generated $234 million in annual subscription revenue and driven an 82% year-over-year increase in average revenue per user (ARPU) to $191 in Q3 2025. Yet, even with these metrics, Futu's P/S multiple remains significantly lower, suggesting a potential re-rating if the company continues to execute its growth strategies.

The discount is further justified by Futu's superior revenue per funded account. Despite having a smaller user base, Futu generates revenue per funded account that is approximately six times higher than Robinhood's, thanks to its one-stop platform model. This model integrates brokerage services, market data, and an investor community into a single ecosystem, enabling Futu to monetize users more effectively through diversified revenue streams.

Business Model: One-Stop Ecosystem vs. Subscription-Driven Growth

Futu's one-stop platform is a cornerstone of its competitive advantage. By offering a comprehensive suite of services-including real-time market data, educational resources, and a social trading community-the company fosters deeper user engagement and higher lifetime value. This approach has allowed Futu to scale efficiently, with its operating margin expanding by 520 basis points in Q2 2025, driven by cost controls and AI-driven automation.

In contrast, Robinhood's strategy has pivoted toward subscription-based monetization through its Gold offering. While this model has proven effective in boosting ARPU and user retention-Gold's subscriber base grew by 77% year-over-year to 3.9 million in Q3 2025- it relies heavily on frequent trading activity and premium feature adoption. This exposes Robinhood to volatility in market conditions, as trading volumes and user spending on subscriptions can fluctuate with broader economic trends.

Futu's diversified revenue model, on the other hand, is less susceptible to such volatility. Its platform generates income from commissions, subscription fees for premium data, and value-added services like structured products. This multi-pronged approach not only stabilizes cash flows but also positions Futu to capitalize on emerging opportunities, such as AI-driven tools for personalized investment insights.

Long-Term Growth: International Expansion and AI-Driven Scalability

Futu's long-term growth potential is underpinned by its aggressive international expansion and strategic investments in AI and automation. As of September 2025, the company reported 3.1 million total funded accounts, a 42.6% year-over-year increase, with Hong Kong, Singapore, and Malaysia driving the majority of client acquisitions. This global diversification has not only expanded Futu's addressable market but also insulated it from regional regulatory risks.

Looking ahead, Futu's management has set an ambitious target of adding 800,000 new funded accounts in 2026. To achieve this, the company is rolling out localized features such as Bursa derivatives in Malaysia and SGX futures in Singapore, while also leveraging AI to enhance customer service and reduce acquisition costs. These initiatives align with broader industry trends, as agentic AI and hyperautomation are projected to become critical drivers of operational efficiency in 2026.

Moreover, Futu's strong balance sheet-boasting $17.8 billion in cash and equivalents as of September 2025-provides ample liquidity to fund further expansion and R&D. This financial flexibility contrasts with Robinhood's reliance on subscription revenue, which, while growing, is more cyclical in nature.

Conclusion: A Compelling Investment Thesis

Futu's 11.4x 2026e P/S multiple, combined with its superior revenue per user and diversified growth strategies, positions it as a compelling alternative to Robinhood in the retail trading sector. While Robinhood's Gold subscription model has delivered strong short-term metrics, Futu's one-stop ecosystem and international expansion offer a more sustainable path to long-term value creation. As the company continues to leverage AI and automation to optimize costs and scale operations, its valuation discount appears increasingly attractive, particularly in a market where user acquisition costs are rising and competition is intensifying.

For investors seeking exposure to the next phase of the retail trading revolution, Futu represents a high-conviction opportunity-one that balances growth potential with disciplined execution.