Robinhood just reminded Wall Street that the crypto casino doesn’t always pay the house.
The fintech brokerage reported fourth-quarter revenue of $1.28 billion on Tuesday, a 27% year-over-year increase that still managed to miss analyst expectations of $1.35 billion by a comfortable margin. The culprit was obvious: crypto trading revenue cratered 38% year-over-year to $221 million, well below the $242 million analysts had penciled in. Crypto notional trading volumes on the platform plummeted 52% to $34 billion.
Shares fell roughly 8% in after-hours trading. By Wednesday morning, HOOD was trading around $85, attempting a modest bounce but still sitting 25% below where it started 2026.
The Numbers Tell Two Different Stories
Here’s the thing about Robinhood’s quarter: it was simultaneously disappointing and impressive, depending on which line items you care about.
The bad news landed squarely on the top line. Revenue missed. Adjusted EBITDA of $761 million fell short of the $833 million estimate. Net income dropped 34% to $605 million from $916 million a year ago, though that comparison is distorted by a $424 million tax benefit that inflated last year’s number.
But dig one layer deeper and the picture shifts. Earnings per share came in at $0.66, beating the $0.63 consensus. Options revenue surged 41% to $314 million. Equities revenue jumped 54% to $94 million. Net interest revenue climbed 39% to $411 million. Gold subscribers hit 4.2 million, up 58% year-over-year. Total platform assets reached $324 billion, a 68% increase. Funded customers grew 7% to 27 million.
Full-year 2025 was a record by every meaningful measure: $4.5 billion in revenue, $2.05 diluted EPS, and $68.1 billion in net deposits. This is not a company in trouble. This is a company whose highest-margin revenue stream decided to take a nap.
The Crypto Problem Is Real, But It’s Shrinking
Robinhood’s crypto dependency has been both its superpower and its vulnerability. When Bitcoin rips, Robinhood prints. When Bitcoin stalls, the revenue line suffers in ways that equities and options can’t fully offset. Digital assets have historically generated higher per-transaction revenue than stocks, so a contraction in crypto trading carries an outsized hit to the top line.
Christian Bolu, senior analyst at Autonomous Research, framed it bluntly on Yahoo Finance: “An expensive stock and a top line miss is not helpful at all.” He noted that deposit growth decelerated in Q4 and continued slowing into January. The selloff, he said, was “warranted given high expectations.”
But Bolu also offered a critical counterpoint. Crypto’s share of Robinhood’s revenue has been declining, falling from north of 20% to a trajectory that analysts expect will settle near 10% of the business. If a full-blown crypto winter materialized, with trading volumes dropping to 2022-2023 trough levels, Bolu estimated it would only hit Robinhood’s P&L by about 10%. That’s meaningful, but it’s not existential. Not anymore.
CFO Shiv Verma, who officially took over the role from Jason Warnick, noted on the earnings call that active crypto traders remain engaged but that rebate rates came in lower than expected due to pricing tier dynamics. Translation: the whales are still trading, but the casual speculators have wandered off. That’s what happens when Bitcoin’s volatility cools and spot ETF outflows accelerate, as Bloomberg reported Deutsche Bank tracking through November and December.
Prediction Markets Are the New Crypto
The most telling signal from Robinhood’s earnings call wasn’t about crypto at all. It was about prediction markets.
Nearly a third of analyst questions, six out of twenty, focused on event contracts and prediction markets. Matthew Sigel, Head of Digital Assets Research at VanEck, flagged it publicly: “30% of HOOD Q&A concerned prediction markets, by far the #1 topic.”
CEO Vlad Tenev voiced optimism about the business line’s trajectory, pointing to a slew of marquee sporting events in 2026 including the Winter Olympics and FIFA World Cup buildup as catalysts for prediction market volume. Robinhood has been reporting strong demand since launching event contracts in August, particularly around professional and college football.
Bolu agreed with the shift in narrative. “Over time, we think event contracts and prediction markets will be a bigger part of the business than crypto,” he said. Meanwhile, the actual biggest business, options trading, continues to post record volumes heading into 2026.
Robinhood Chain and the Infrastructure Bet
Alongside earnings, Robinhood dropped another piece of news that got less attention in the selloff: the public testnet launch of Robinhood Chain, an Ethereum Layer 2 built on Arbitrum with Chainlink providing oracle infrastructure.
Johann Kerbrat, Robinhood’s SVP and General Manager of Crypto, described the chain as a foundation for tokenized real-world assets and deeper DeFi integration. The mainnet launch is expected later this year, with support for 24/7 trading and self-custody through Robinhood Wallet.
This is Robinhood’s long game. Instead of just being a brokerage that happens to offer crypto, the company is building infrastructure. Whether that matters to the stock price in 2026 is debatable. Testnets don’t generate revenue. But it signals a strategic direction that goes beyond simply waiting for the next Bitcoin cycle to bail out the top line.
The AI Cost Story Nobody’s Talking About
Buried beneath the crypto drama was a disclosure that deserves more attention: Robinhood’s AI systems now resolve 75% of customer support cases, including complex cases that previously required licensed brokerage professionals. The company is also automating its entire engineering pipeline, from code writing through code review to deployment and testing.
The estimated savings? Over $100 million in 2025 alone.
Operating expenses still rose 38% year-over-year to $633 million, outpacing revenue growth. But the AI-driven efficiencies could help flatten that curve going forward, especially if cyclical revenue swings from crypto and options trading create quarters where expense discipline matters more than growth. Robinhood now operates 11 separate business lines each generating $100 million or more in annualized revenue. The platform that started as a meme-stock trading app has quietly become something much more diversified.
Why Analysts Are Still Saying Buy
Despite the miss, Wall Street’s consensus hasn’t cracked. As of this week, 19 out of roughly 23 analysts covering HOOD maintain Buy ratings, with only 2 Sells. The average price target sits around $131 to $148 depending on the aggregator, implying significant upside from current levels. The highest target on the Street is $180 from Citizens’ Devin Ryan. The lowest is $47 from JP Morgan, a notable outlier from last year that hasn’t been updated post-S&P 500 inclusion.
Truist did lower its price target to $130 from $155 ahead of earnings, reflecting the crypto headwinds. Needham reiterated Buy with a $135 target in late January. Piper Sandler’s Patrick Moley maintained his Buy rating with over 100% upside potential, calling Robinhood “a top way to gain exposure to long-term retail trading expansion.”
The bull case boils down to this: Robinhood’s crypto weakness is cyclical, not structural. Options and equities are growing. Gold subscriptions provide recurring revenue. Net interest income offers stability. Prediction markets are a new growth engine. And the stock, at roughly 33x forward earnings after the selloff, is cheaper than it’s been since the post-S&P 500 inclusion run.
The Bear Case You Should Hear
Not everyone is buying the dip narrative. The Motley Fool published a piece arguing HOOD could plunge further in 2026, pointing to a price-to-sales ratio of 23 that towers above its five-year average of 7. Even after the selloff, Robinhood trades at a premium that assumes considerable growth acceleration. If crypto stays cold and prediction markets take longer to scale than expected, that multiple has room to compress.
Morgan Stanley’s Michael Cyprys has the lowest active target at $90, suggesting limited downside from current levels but reflecting skepticism about the growth story’s sustainability. The broader concern is that Robinhood remains a sentiment-driven stock, and sentiment has a way of feeding on itself. The stock is down 49% from its October high of $153.86. That kind of drawdown tests even the most committed bulls.
What Comes Next
Management’s commentary on the call was constructive, even if the numbers weren’t. Transaction volumes were described as “very strong” in January, suggesting Q1 2026 could show improvement. Verma said 2026 “is off to a strong start” and that the company is focused on “shipping great products for customers and driving profitable growth for shareholders.”
The pipeline for 2026 includes expanded prediction markets around major sporting events, the Robinhood Chain mainnet launch, continued international expansion including UK stocks and shares ISAs, and the ongoing automation of internal operations. These are real catalysts with real timelines.
For investors, the calculus comes down to time horizon. If you’re trading the next quarter, Robinhood’s fate is tied to crypto sentiment and whether Bitcoin can stabilize above current levels. If you’re investing over 12 to 18 months, the diversification story has legs: options are growing, subscriptions are scaling, prediction markets are emerging, and the company is building proprietary blockchain infrastructure.
Robinhood missed on revenue. It beat on earnings. It sold off on fear. And the Street, by overwhelming consensus, says the story is intact.
Whether you buy that story depends entirely on whether you think crypto winter is a permanent state or a passing season.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
