TLDR
- Robinhood filed to launch Robinhood Ventures Fund I, giving retail investors access to private AI companies.
- The closed-end structure means shares can’t be easily sold, creating potential liquidity issues.
- Q3 revenue doubled to $1.27 billion but HOOD stock dropped 11% on lower-than-expected crypto revenue.
- The company increased 2025 spending plans to invest in prediction markets and the new Ventures fund.
- Analysts who updated ratings raised price targets 13% on average, signaling confidence despite the sell-off.
Robinhood Markets is bringing private AI investing to Main Street. The trading platform filed with regulators in October to launch Robinhood Ventures Fund I.
The fund will invest in at least five private companies. Retail investors can buy shares and get exposure to hot AI startups like OpenAI and Anthropic.
These are the same companies driving startup valuations through the roof in private markets. Until now, only wealthy investors and institutions could access them.
CEO Vlad Tenev says everyday people want in on the action. He’s not concerned about an AI bubble. Robinhood customers are buying heavily into AI, fully aware of the risks.
But here’s the trade-off. This is a closed-end fund. You can’t just sell whenever you want. If too many people try to cash out at once, there could be serious problems.
Strong Numbers Can’t Stop the Slide
Robinhood dropped 11% on November 6 after releasing Q3 earnings. This was the biggest single-day fall since March 10, when the company paid millions in regulatory fines.
The numbers looked great on paper. Revenue doubled to $1.27 billion, beating the $1.15 billion estimate. Earnings per share tripled to 61 cents.
Transaction revenues surged 129%. Crypto alone jumped 300% year-over-year. Equity revenues climbed 132% and options rose 50%.
Revenue per user increased 82% to $191. The adjusted EBITDA margin expanded to 58% from 42% a year ago.
So what spooked investors? Crypto revenue came in below expectations. That matters because crypto is a major growth engine for the company.
The earnings beat also looked inflated. A lower tax rate boosted the numbers, not stronger operations. Then management raised expense guidance for 2025.
Crypto prices fell on November 6 too. That added more selling pressure to the stock.
Building Beyond Crypto Dependence
Robinhood now runs 11 separate business lines. Each one generates at least $100 million annually. That diversification is starting to pay off.
Prediction markets are the newest addition. Volume has doubled every quarter since the 2024 election. Management is increasing spending to grow this area faster.
The Ventures fund is another growth bet. Changes in regulations, including a Trump executive order, made it easier to include private investments in retirement accounts. Money managers see retail investors as a fresh source of capital.
Despite the post-earnings drop, HOOD stock is still up over 200% in 2025. The stock sits just 17% below its all-time high.
Wall Street’s reaction was split. The consensus price target stands at $132, implying only 4% upside. But analysts who updated forecasts on November 6 told a different story.
They raised targets by an average of 13%. Their updated price targets average $157.50, suggesting 24% potential gains.
TipRanks rates the stock a Moderate Buy. That’s based on 13 Buy ratings, five Holds, and one Sell.
The Ventures fund could open a new revenue stream. But investors need to understand the risks. Private company investments are illiquid. Startups can fail. And there’s no easy exit if things go wrong.
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