Robinhood (HOOD) Stock Drops on Crypto Fears: Time to Buy the Dip?

TLDR

• Robinhood (HOOD) stock dropped 17% over two days after Q4 earnings on February 10, with EPS beating estimates at $0.66 but revenue missing at $1.28 billion versus $1.35 billion expected.
• Crypto transaction revenue fell 38% to $221 million due to lower trading volumes, accounting for about 18% of total revenue, while prediction markets hit record volumes of $3.5 billion in January.
• Analysts trimmed price targets but maintained Buy ratings, with targets ranging from $100 to $135, implying 40-90% upside potential from current levels.
• CFO Shiv Verma defended the company’s “financial super app” strategy, noting over 80% of revenue comes from outside crypto and highlighting growth in institutional services and prediction markets.
• HOOD shares are down 37% year-to-date, with analysts viewing the $60-$75 range as a buying opportunity despite short-term crypto headwinds expected through Q2.

Robinhood Markets stock took a beating this week, dropping nearly 17% over two trading days following its Q4 earnings announcement on February 10. The numbers told a complicated story for the retail trading platform.

Robinhood Markets, Inc., HOOD

The company posted earnings per share of $0.66, beating the analyst consensus estimate of $0.63. But revenue came in at $1.28 billion, falling short of the $1.35 billion Wall Street expected.

The revenue miss traced back to crypto. Transaction revenue from cryptocurrency trading plunged 38% to $221 million as trading volumes dried up.

Shares are now down 37% year-to-date. The question facing investors is whether this selloff represents a buying opportunity or a warning sign.

Analyst Response: Lower Targets, Same Conviction

Truist Financial analyst David Smith cut his price target from $130 to $120 while keeping his Buy rating. That target still suggests 68.7% upside potential from current levels.

Smith called the Q4 report “frustrating.” He pointed out that outside of prediction markets, Robinhood delivered few positives. User growth and net deposits looked weak in December, though January showed slight improvement.

Needham analyst John Todaro lowered his target to $100 from $135 but kept his Buy rating. He noted that Q4 results were strong and met his estimates. Prediction markets stood out, with January volumes reaching a record $3.5 billion in contracts.

However, Todaro expects crypto weakness to persist for two more quarters before bouncing back. Options and equities trading also showed softer performance heading into fiscal 2026.

Piper Sandler analyst Patrick Moley trimmed his target from $155 to $135 while maintaining his Buy rating. His new target implies 89.8% upside potential.

CFO Defends Long-Term Vision

CFO Shiv Verma pushed back against concerns that investors focus too much on crypto performance. He emphasized that crypto accounted for only about 18% of revenue last year, with over 80% coming from other sources.

The company is banking on several catalysts to revive its crypto segment. These include tokenization of real-world assets and expansion into institutional markets. Verma noted that institutions now view crypto as an asset class similar to equities.

Robinhood is also investing heavily in its product roadmap. Plans include deploying more AI tools for active traders and expanding its Robinhood Gold Card. The acquisition of TradePMR for human advisers targets millennial and Gen Z customers.

Bernstein analyst Gautam Chhugani sees the current weakness as temporary. He highlighted 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 represents a good buying zone, even if crypto remains weak near-term.

He pointed to prediction markets as a potential billion-dollar annual business in 2026. The platform hit record January contract volumes of $3.5 billion in this segment.

On TipRanks, HOOD carries a Strong Buy consensus rating based on 14 Buy ratings and two Hold ratings. The average price target of $135.46 implies 90.5% upside potential from current trading levels.

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