TLDR
- Robinhood (HOOD) stock tumbled 17% after February 10 Q4 earnings showed revenue of $1.28 billion missing the $1.35 billion estimate despite EPS of $0.66 beating forecasts.
- Cryptocurrency transaction revenue declined 38% to $221 million on lower trading activity, representing approximately 18% of total company revenue.
- Wall Street analysts cut price targets but kept Buy ratings, with average target of $135.46 suggesting 90.5% upside potential from current price levels.
- Prediction markets generated record $3.5 billion in January contract volumes, emerging as potential billion-dollar annual revenue stream for 2026.
- HOOD trades down 37% year-to-date with analysts recommending $60-$75 range as accumulation zone ahead of expected crypto recovery in Q2.
Robinhood Markets experienced a brutal selloff over two trading sessions, with shares falling nearly 17% following its February 10 quarterly report. The results painted a complicated picture for the retail brokerage platform.
The company delivered EPS of $0.66, beating the Street’s $0.63 estimate. However, revenue disappointed at $1.28 billion against expectations of $1.35 billion.
Crypto trading drove the revenue shortfall. Cryptocurrency transaction revenue plummeted 38% to $221 million as trading volumes weakened across digital asset markets.
The stock now sits 37% lower year-to-date. The key question is whether this represents capitulation or continued pressure ahead.
Analysts Slash Targets While Maintaining Conviction
David Smith at Truist Financial reduced his price target to $120 from $130 but held his Buy rating. The new target still implies 68.7% upside from current levels.
Smith labeled the quarter “frustrating” and noted that outside prediction markets, positive catalysts were scarce. User growth and net deposits disappointed in December, though January showed marginal improvement.
John Todaro at Needham lowered his target to $100 from $135 while keeping his Buy recommendation. He acknowledged strong Q4 results that met his projections but flagged concerns about crypto, options, and equities performance heading into the new fiscal year.
Todaro expects crypto headwinds to persist for approximately two quarters before stabilizing. Prediction markets provided a bright spot with January volumes reaching $3.5 billion in contracts.
Patrick Moley at Piper Sandler trimmed his target from $155 to $135 but maintained his Buy rating. His target implies 89.8% potential upside.
Moley characterized short-term headwinds as manageable for long-term investors. He described Robinhood as the best proxy for secular retail trading growth and closest competitor to achieving super app status in fintech.
CFO Defends Strategy After Market Reaction
CFO Shiv Verma addressed investor concerns in media appearances following the earnings release. He emphasized crypto’s limited contribution to overall performance.
“Crypto accounted for only about 18% of revenue last year,” Verma stated. “More than 80% of our revenue comes from outside crypto.”
Verma outlined a four-pillar strategy: winning with active traders, capturing wallet share, expanding globally, and penetrating institutional markets. He described progress across all areas as transformative compared to five years ago.
The company anticipates several crypto catalysts ahead. Tokenization of real-world assets and institutional adoption remain key focus areas. Verma noted institutions increasingly view crypto as legitimate asset class following ETF launches and derivatives growth.
Recovery Timeline and Buying Opportunity
Bernstein analyst Gautam Chhugani characterized the selloff as temporary noise. He pointed to a 6% EPS beat at $0.67 and record highs for funded accounts and Robinhood Gold users.
Chhugani suggested the $60 to $75 price range offers attractive entry points even if crypto weakness extends into Q2. He highlighted prediction markets as potentially generating $1 billion in annual revenue during 2026.
The company continues executing its product roadmap. Key initiatives include AI-powered tools for active traders and broader rollout of the Robinhood Gold Card. The TradePMR acquisition targets wealth management expansion for younger demographics.
The consensus view on TipRanks shows Strong Buy ratings from 14 analysts with two Hold ratings. The $135.46 average price target represents 90.5% upside from current trading levels.
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