In case you missed it from this past week:

Caveats:

Caveats:

Lemonade announced that it crossed $1 billion in total in force premium (IFP) on March 25th. Notably, this places them slightly ahead of the high point of their guidance, with another week left in the quarter. As the company has been talking about constantly, 2025 will be the year when its car underwriting algorithms grow up and it secures needed regulatory approvals on premium hikes to really rev this growth engine. Car won’t be the dominant growth driver this year, but it will scale to a point of being a key contributor going forward. And as part of this announcement, Lemonade Car expanded to Colorado to reach about 40% population coverage.

Lemonade built an expensive foundation that led to bloated early losses as costs scaled ahead of revenue. Now, with this foundation firmly in place, the company is ready to keep accelerating top line growth while racing to and beyond profitability. Technology costs in place can support exponential scaling without more incremental expense, and that’s the common theme for all line items outside of growth expense for Lemonade. Economies of scale are meaningfully kicking in and they are masterfully executing.

Want them to slow down revenue to accelerate the path to profit and preserve cash? They can do it. Want them to re-accelerate growth spend to add more growth without sacrificing schedule profitability? They can do it. Need them to correctly forecast a path to breakeven to assuage investor concerns amid nasty cycles? They can do that too. This is a financial puppet master capable of pulling whatever levers it needs to give investors what they want. It is not normal for a young growth company to have this much control over their financials, yet they do.

They are masterfully executing, which is why I am comfortable holding a position in this company.  It’s more speculative and less profitable than anything else I own… yet their consistently excellent execution keeps me enthusiastically involved. I’m excited to keep watching this company grow up… without rampant inflation, regulatory delays and soaring cost of capital standing in its way.

Robinhood hosted an event to unveil three new products for its Robinhood Gold subscribers. It now has 3.2M of these subscribers, which represents brisk and stable 21% Q/Q growth. All of these products are meant to expand access to the ultra-premium services enjoyed by the upper-class in private banking. We will work through these in order and then discuss competitive implications for SoFi specifically.

Robinhood Strategies:

Robinhood Strategies is the firm’s new investment advisor. It offers a “hands-off” way to invest your money, with a combination of autonomous service and authority to approve or modify recommended actions. The product is curated by members themselves, with an onboarding questionnaire used to understand customer preferences and risk tolerance to point them to ideal allocations. It’s a very similar concept to the robo-advisor products we see from so many others, but there’s an interesting cost structure here. There’s a 0.25% asset fee (like for typical robo-advisors) but also a fee cap that limits costs for service at $250 per year for Gold subscribers. Considering advisors can routinely cost thousands and sometimes millions for especially wealthy clients, the $250 cap (depending on how good the service is) should be popular.

The product comes with other features like fee and return transparency, contextualized alerts whenever holding change, and Monte Carlo simulations to see how wealth can track over time based on deposits and performance. The interface is quite pretty just like the core Robinhood app.

This is available now.

Robinhood Cortex:

Robinhood debuted its AI-powered Research Assistant called Robinhood Cortex. It’s coming later in the year for Gold Subscribers, with an initial focus on options trading first and crypto currencies second. For options, the main demo was its “Trade Builder.” This offers step-by-step options trades and strategy suggestions based on your underlying stock thesis. If you think something is a clear buy for the next few years and want to express that optimism via options (like Robinhood’s typical consumer often does), it will likely point you to a menu of LEAPs. It also debuted a slick new interface for options chains that is available today.

Eventually, Cortex will be used for all facets of Robinhood’s apps. It will be leaned-on to query data and turn price alerts into contextualized alerts with explanations for the sudden move. It calls these “Stock Digests.” Generally speaking, it will provide timely and condensed information on technicals, breaking news and Robinhood community investment trends. The company will use world-class reasoning models from partners, its own data and a strict data quality filter to ensure hallucination rates are as low as they need to be with investment help.

Robinhood Banking

The Robinhood credit card app is rebranding to Robinhood Banking – coming late this year. This will be the company’s official entrance into online banking, through a 3rd party partnership with Coastal Community Bank. The company already had a scaled direct deposit business with 4% yield on cash held, but now it’s morphing this into a more formal checking and savings account suite with more bells & whistles. Onboarding for account creation and direct deposit takes just a few clicks, with the entire process happening natively on the app. It will offer joint accounts, goal-oriented savings buckets and children’s accounts with allowances. This will feature the same 4% account APY and will integrate with the Robinhood Gold card, which is expected to quickly expand from 100,000 to 200,000 cards issued. More features include:

Like other fintechs, the lack of physical branches or archaic technology should make this a lower cost provider in the field.

Cash Delivery:

Candidly, this one is pretty gimmicky. Robinhood will offer access to on-demand cash delivery like you would order a ride or a meal. They talked about rising levels of ATM crime and that cash still represents 16% of payments. Still, I can’t help but think the use cases here primarily lie in illicit markets where cash is still needed. That in no way means Robinhood will be held responsible. They won’t be. It just means I think everything else they talked about at the event is more compelling than this is.

Robinhood + Kashi Sports Gambling:

New Jersey sent Robinhood and Kalshi a cease and desist letter to halt offering sports gambling options on Robinhood’s app. Considering the Commodity Futures Trading Commission (CFTC) asked Robinhood to stop offering bets on the Super Bowl, I think this news was pretty much inevitable and think more states will follow New Jersey’s lead here.

This doesn’t mean FanDuel and DraftKings can’t offer event contracts on other bet types, but it does mean Robinhood may have a tougher road ahead for offering sports bets on its brokerage app. Candidly, I don’t think this should be allowed. Housing retirement funds and sports bets on one app just sounds like a dangerous idea to me. But I’m not a regulator, so we’ll have to see what they decide.

SoFi Implications:

My X feed was especially noisy during this event, as many Robinhood bulls took to social media to proclaim SoFi dead and this company the winner-take-all. While all announced products outside of options and crypto compete with SoFi’s financial services arm, I just think that argument is based on hubris rather than reality. This seems to happen after every Robinhood product event, and I wanted to address all of this negativity. Again, SoFi has all of these products (including easy direct deposit transfer) besides joint accounts, which it is currently working on.

Furthermore, SoFi has been competing with thousands of bank account competitors since its inception and has consistently overcome that fierce competition every step of the way. Do we really think one more offering in the market means they can no longer grow? Really? I just strongly believe SoFi’s future success is far more in its control and far more based on its own execution than that. Both of these companies are still peanuts in a trillion+ dollar industry. They can both grow for a very long time; one succeeding will in no way prevent the other from succeeding, and I think the competitive overlap will prove to be significantly less material than some believe. SoFi will win some customers from Robinhood & vice versa, but the vast majority of these share gains will come from the massive incumbents of the industry.

And furthermore, none of this news disrupts SoFi’s true differentiation and competitive edge. Considering banking is a commodity, as I’ve said so many times, the way to win is with input cost advantages. SoFi and Robinhood both have the advantages of having no branches. But? Robinhood doesn’t have SoFi’s banking charter to provide lower cost of capital. And? Robinhood doesn’t own its own tech stack to shed all third-party fees like SoFi. Instead, Robinhood uses SoFi’s tech stack to power its debit processing, Coastal Community Bank for its bank app and other 3rd parties across its offering. In my mind, SoFi remains the only bank to clearly combine the cost advantages of the incumbents and the disruptors, while adding another layer of vertical integration to become even more efficient. This recipe is firmly intact, and is how SoFi will afford a higher APY if it feels it needs it to attract more deposits (which it currently doesn’t)… how it will profitably offer lower interest rates on loans… and how it will offer the growing list of perks under SoFi Plus.

Finally, I wanted to address the “slow innovation” complaint I saw from some this week. I think this stems from Robinhood frequently hosting events to publicize all of their product launches and plans while SoFi doesn’t, but let’s indulge this notion for a moment. I do get where that’s coming from, but we have to remember one very important thing: Robinhood’s client base is very different from SoFi’s. Robinhood goes after an active trader that loves crypto, options and margin and was yearning for a sports gambling product. SoFi goes after busy, affluent professionals that want more support as they build wealth and manage finances. During the Robinhood event, CEO Vlad Tenev asked the crowd “how many of you trade options?” The number of hands that shot up dwarfs what you’d see at a SoFi investor event. That’s so telling.

So what am I getting at here? While level 1 options would be nice, that’s just not a material priority at SoFi. The user base, for the most part, does not care nearly as much about this as SoFi’s ability to service more loan demand or access more credit products. So? It built the plumbing and funding for its lending platform so it could service more borrowers (without stressing the balance sheet) and turned that into a couple hundred million dollar business in a few quarters. They worked hard to lay the foundation for their credit card business and began scaling that with more products and issuance. They prioritized this work because it moves the financial needle much more than options. Resources are finite; prioritization is inevitable.

Ideally, we’d like them to simultaneously do as much of this work as possible – and I think that’s soon coming. This year, SoFi will wrap up a monstrous Technisys integration project to get its app running on the modern multi-core Galileo infrastructure. Not only will finishing that work free up more resources to innovate, but it will allow the company to move much faster on its roadmap, thanks to the light-weight, cloud-native, highly capable foundation. As that work finishes, I expect the product engine to accelerate back to the cadence we enjoyed before this purchase. That’s quite intuitive to me. I also expect that to mean SoFi Invest closes the 50% under-monetization gap leadership currently sees and finds more rapid growth (perhaps with a crypto debut to add fuel to the fire based on regulatory developments).

That event did nothing to change my views of SoFi. Robinhood is a capable company with a talented CEO and a flashy approach with investors. SoFi is a capable company with a talented CEO and a conservative approach with investors. Stylistically, I stylistically prefer SoFi’s approach and think the investment case is more compelling. If you see things differently, that’s your prerogative and I fully understand.

Finally, I was able to chat with a SoFi insider about their thoughts on this Robinhood event. I got permission to share the direct quote, but not the name of the person. Earning the trust of company contacts is extremely important for me to consistently get responses from them. It makes me better at my job for all of you. So I do hope you understand that this quote will remain anonymous:

“We will win. We will just do it the right way. They (Robinhood) haven't even developed the product yet... that was not a live app they showed.  You don't have a live app then say you are not launching for another 6 months. They aren't close to having built anything on banking yet. And if someone went on SoFi and compared our banking offering to theirs they would see they are missing a ton of what we offer and they just added sizzle to make a lot of it look new. Don't get me wrong World War III started yesterday and we are stepping on the gas even more. Our Achilles heel has been multi-accounts but that is being worked on as part of a complete re-architecture on top of Technisys.”

SoFI Insider

MAGNA reduced their 2025 ad growth outlook from 4.9% to 4.3% due to economic fragility concerns. If the company fixes the Kokai product launch like I expect, this headline should be more noise than signal for TTD specifically. Why? Because for more than a decade, it has delivered uniformly positive impacts on targeting, identification, measurement and overall return on ad spend (ROAS). Its ability to cut booking costs by 50% (sometimes more) means it routinely delivers explosive gains to marketing efficacy. 

So? When times get more uncertain, marketers are forced to do “more with less” and prioritize their most efficient ad outlets. The vast majority of the time, these outlets include programmatic ad placements through TTD’s platform. That is how the company has bucked macro cycles to deliver sustainably brisk compounding in a cyclical sector. Ad budgets flock to its platform the most when times are the hardest. And while some existing clients may temporarily lighten up on spending amid the current geopolitical volatility, the net impact should be more market share gains and more growth. 

In other news, The Trade Desk was upgraded to a buy at CFRA due to strong growth tailwinds. Citi also reiterated their buy rating on the company this week, calling competitive concerns overblown and the Kokai fix straightforward. Maybe they read the newsletter.

Over the last three weeks of college basketball conference tournaments and March Madness, DKNG has a 9% hold rate. FanDuel’s is 8.7% over the last 3 weeks. Interesting to see DKNG leading here, as it has trailed in hold rate vs. FanDuel for years. While a small sample size is anecdotal, this does offer more evidence of DKNG closing the gap between its parlay menu and Flutter’s, which the team has talked about in its last few public appearances. It’s good to see that playing out in real data. Additionally, in the most comparable 3 week period of 2024, Fanduel’s overall bet volume (handle) was 30% larger than DraftKings. It was the clear #1. But what about this year? I’m glad that you asked. DraftKings total handle is 10% larger than Fanduel. Just one state. Just a few (important) weeks, but I do find this quite encouraging. And to add to this positively, Poker Industry Pro reported that DraftKings took 55% of Massachusetts market share in February, with FanDuel at 31%. Notably, this is DKNG’s best state, but its lead vs. the overall field is growing a bit. How about in Arizona? Well… according to Sports Business Journal, DKNG market share rose from 34% to 35% in 2024, while FanDuel fell from 37% to 36%. DraftKings is winning regardless of how the share price is currently trending. 

And in other news, the aforementioned cease and desist letter from New Jersey to Robinhood and Kalshi makes it less likely for them to turn into another competitor. This could potentially block a potential competitor without jeopardizing DKNG’s ability to secure an events contract license and start offering different kinds of bets.

Alphabet released Gemini 2.5 as its first experimental reasoning and thinking model. This means the models are capable of deciding when to think longer to produce a better answer, or when to optimize for quick simple token outputs. As you can see from the image below, whether it’s reasoning, multi-tasking, math, coding or things like puzzles, it ranks extremely well among leaders. Several third-party research organizations including Live Bench, Scale AI and LM Arena AI rank it first in the world.

There are going to be constant model updates and launches from players to leapfrog each other in the coming years. I expect that to happen repeatedly. So, while this is good news, I don’t think investors should take it to mean Alphabet is the permanent leader and the rest are now hopelessly behind. Just like Alphabet wasn’t permanently behind a year ago, competitors have their own model innovation coming and the Search King will need to keep sprinting to stay ahead. Why does this news matter? I think sentiment surrounding this name has again gotten far too negative. And I think news like this makes it clear how capable this company is and how powerful of an agentic AI player I expect it to be in the coming years. I’ll keep saying it: The full-stack approach, with world-class research teams, chips, cloud infrastructure, data, models and globally distributed apps, is a compelling one.

Waymo will also launch in Washington DC next year.

Amazon debuted a new AI tool to match customers with relevant products based on data profiles. It is called “Interests.” It’s also introducing “Health AI” as a new GenAI app with healthy living recommendations and a direct integration with its budding pharmacy, as well as its telehealth offering (One Medical). And in related news, Amazon created a new agentic AI group, as the company sees this opportunity turning into a sizable contributor for AWS over time.

There were some comments out of Europe this week on the EU imposing tariffs on payment providers like PayPal as part of the trade war. This is pure speculation at this point, as it was simply an idea floated by a single member of government over there. I’d also point out that two of the most important companies in Europe – Stripe and Adyen – directly compete with PayPal… so there are easy countermeasures to levy to lower the probability of this happening further. PayPal also announced that it crossed $30 billion in total small business loan originations.

Uber added Petco and Sally Beauty Holdings as new on-demand delivery partners.

Meta is reportedly toying with charging $14 per month for an ad-free Instagram experience. This would reduce ad-based regulatory risk in Europe especially if it’s implemented and works. It also launched a Friends tab on Facebook, which is the same idea as the Following tab on X.

CrowdStrike added new exposure management tools to include network vulnerability assessments. This uncovers and helps resolve network-level vulnerabilities “without additional scanners, agents or hardware.” The company sees this “reducing critical vulnerabilities” in the network by up to 98%. Another tool for more vendor consolidation, cross-selling and profitable growth. This also connected seamlessly with Falcon Fusion Security Orchestration, Automation and Response (SOAR) to actionably clean up issues.

Cava will be added to the S&P 400 MidCap ETF.

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