Investing $10,000 in Robinhood stock at its IPO closing price would now be worth roughly $27,160, though the shares opened near $38 and closed the first session at $34.82. The stock hit an all-time high of $152.46 in October 2025 and is now down roughly 38% from that peak as the crypto market pulled back. Robinhood trades at about 37 times this year's expected earnings and 16 times expected sales. In the third quarter, sales rose about 12% year over year to $1.42 billion, but adjusted EPS fell 3% to $0.60 as operating expenses climbed 16%, and the full-year operating expense target was set at $2.675 billion to $2.75 billion, with the top end cut by $25 million. The author says prediction markets and new products are growth drivers, and that stronger sales, earnings, and a crypto valuation rebound could lift the valuation further.
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Robinhood shares trade near $97, about 35% below the all-time high of around $152 reached in late 2025, a bigger decline than Charles Schwab (about 15%) and Interactive Brokers (about 20%). The author argues the stock still looks expensive, with a price-to-earnings ratio of about 42x versus 16x for Schwab and 31x for Interactive Brokers, which makes value investors less likely to be interested. The company went public only in 2021 and has not been tested by a deep, prolonged downturn, while its customers, many new to investing, are using more margin (margin balances up 127% year over year in Q2 2026) and expanding into crypto and prediction markets. The author says the premium over peers could keep most investors on the sidelines until the company and its customers face a test on the scale of the Great Recession or the dot-com bubble.
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- Robinhood Sinks 7% as Crypto Slump and Tighter Spreads Overshadow Record Prediction Markets Quarter; Interactive Brokers Edges Higher, Webull Barely Budges
Robinhood (HOOD) shares were down 7% at $88 in morning trading, while Interactive Brokers (IBKR) rose 2% to $83 and Webull (BULL) barely moved. In Q3 2026, Robinhood's revenue rose 12% year over year to $1.42 billion, just below the $1.43 billion consensus, and GAAP diluted EPS was $0.51 versus a $0.57 estimate. Crypto trading revenue fell 55% to $120 million and net interest revenue slid 9% to $415 million, while operating expenses rose 16% to $739 million. On the other side, prediction markets revenue hit a record $173 million and options trading revenue rose 31%. CFO Shiv Verma estimated that each 25 basis point move in rates shifts revenue by 1.5%, all else being equal, ahead of the Federal Reserve's decision at 2 p.m. ET on October 28.
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