Is Robinhood Stock Halal?

Robinhood's net interest revenue comes from three related activities, all built on interest or interest-like mechanics. Margin lending is the most direct: when a customer borrows against their portfolio to buy more securities than their cash balance allows, Robinhood charges interest on that loan, a textbook case of riba. Securities lending is a step removed but still interest-adjacent: shares that customers have pledged as margin collateral (or, in the Fully-Paid Securities Lending program, shares customers own outright) are lent by Robinhood to institutional short sellers, who pay a fee that Robinhood shares with participating customers, structurally a rental fee for a security, but one that exists to facilitate short selling, which many Shariah scholars separately restrict on grounds of gharar and selling what one does not own. Cash sweep is the third piece: Robinhood sweeps uninvested customer cash into partner banks and keeps the spread between what the bank pays and what it credits to users, functionally identical to a bank's net interest margin. None of Robinhood's core stock, options, or crypto trading commissions are themselves impermissible; the problem is concentrated entirely in this interest-based revenue segment.

Robinhood's FY2025 net interest revenues totaled $1.514 billion against $4.473 billion in total net revenue, 33.85%. That is actually a modest improvement from FY2024, when net interest revenue of $1.109 billion made up 37.58% of a smaller $2.951 billion revenue base; transaction-based revenue (options, crypto, and equities trading, up to $2.628 billion in FY2025 from $1.647 billion in FY2024) simply grew faster than the interest business over that period. The improvement is a function of a strong trading environment, not a shift away from lending: Robinhood has continued expanding margin availability, its securities lending program, and Robinhood Gold (which bundles a lower margin rate and higher cash sweep yield as a subscription perk), all of which point toward continued growth in net interest revenue in absolute terms even if trading revenue happens to outpace it in a given year.

For Robinhood to fall under the 5% AAOIFI threshold, net interest revenue would need to shrink to roughly one-seventh its current size relative to total revenue, an outcome that would require Robinhood to largely exit margin lending, securities lending, and its bank cash sweep program. There is no indication of that happening; if anything, Robinhood has marketed margin investing and the Gold subscription (which is built around cheaper margin and better cash sweep rates) as growth priorities. Separately, payment for order flow, which has historically accounted for the large majority of Robinhood's transaction-based revenue, is a genuinely contested practice among Shariah scholars: some view it as an acceptable fee paid by market makers for order routing, others view it as an undisclosed conflict of interest that can work against a customer's best execution. PureInvest does not count PFOF revenue in Robinhood's impure-revenue percentage, since it is a routing fee rather than interest, but investors uncomfortable with PFOF on separate ethical grounds should weigh that alongside the interest-based disqualification described above.

At 33.85% impure revenue, Robinhood sits far enough past the 5% AAOIFI ceiling, and close enough to the point where more than a third of every dollar of revenue is interest-linked, that purification is not a sound strategy. Donating over a third of returns each year to offset an ongoing, structurally growing interest business is not what purification is designed for; it is designed for incidental impurity, not a core revenue stream. Shariah-conscious investors holding Robinhood stock should plan to divest rather than hold and purify. Investors who use the Robinhood app itself to trade halal-screened stocks without margin are not affected by this verdict in the same way; this guidance concerns owning HOOD equity, not using the brokerage platform to buy other compliant securities. As always, consult a qualified Shariah advisor for guidance specific to your situation.