Robinhood Stock Is Down Nearly 37%—So Why Is Wall Street Still So Bullish?

Key Points

• Robinhood shares fell more than 3% after Q3 earnings beat on adjusted EPS but missed revenue expectations amid rising expenses.
• Cryptocurrency revenue dropped 55% year-over-year as crypto trading volume fell, offsetting gains from record options, stock, and event contract activity.
• Analysts maintain a Moderate Buy consensus rating with a $127.45 average price target, implying roughly 40% upside despite recent share weakness.

Shares of fintech and brokerage platform Robinhood Markets NASDAQ: HOOD fell by more than 3% on Wednesday, Oct. 28, following the company's Q3 earnings release the previous afternoon.

The sell-off came as Robinhood continues to grapple with rising expenses despite record trading volume in stocks, options, and prediction markets.

Robinhood announced adjusted earnings per share (EPS) of 60 cents, beating the analyst consensus estimate of 56 cents. But revenue of $1.42 billion fell short of Wall Street’s expectation of $1.44 billion, even though it marked an approximately 12% year-over-year (YOY) increase.

Shares of HOOD are now down more than 35% over the past year and nearly 27% from their year-to-date high on Sept. 3. Nonetheless, analysts still see strong upside for the stock over the coming year.

Cryptocurrency Weakness Offset Growth Elsewhere

Notably, Robinhood saw transaction-based revenue increase 19% YOY in Q3, largely driven by record event contracts, options, and stock volume. Adjusted EBITDA also reached a record $808 million, with a 57% margin.

The company also reported net deposits of $15.7 billion in Q3, followed by more than $13 billion this month so far (through Oct. 27), including $6 billion attributed to the Dell family’s contribution to Trump Accounts. Together, those deposits helped push Robinhood's year-to-date total past $68 billion, putting the company ahead of its annual 20% growth target well before year-end.

Robinhood also reported strong adoption of new products, including 5.2 million Gold subscribers, accounting for a 34% YOY increase. Additionally, the company’s agentic trading accounts now hold more than $250 million. However, growth in transaction-based revenue was partially offset by a 55% YOY decline in cryptocurrency revenue to $120 million.

Amid the ongoing crypto winter, the company suffered from traders pulling back from speculative assets in Q3. Crypto trading volume fell around 38% YOY across Robinhood's platform. Depressed prices for leading assets—including Bitcoin (BTC) and Ethereum (ETH), which are down roughly 34% and 51% from their respective all-time highs—also translated into reduced fee potential per trade.

Robinhood’s proprietary Layer-2 network, which launched on July 1, had its first full quarter of operation, bringing in $26 million in cryptocurrency revenue. But its blockchain revenue was the only highlight among the company’s crypto segment, as the platform's crypto spot trading business fell 6% quarter-over-quarter.

Prediction Markets Drive Growth as Robinhood Expands Its Reach

In spite of the Q3 disappointment, Robinhood’s diversification strategy is already proving to be effective. Event contract revenue increased sixfold to $173 million with customers trading a record 16.4 billion contracts during the quarter—more than seven times the volume of the preceding year.

A handful of forthcoming and recently enacted initiatives also underscore analysts’ bullishness.

In his earnings call comments, Robinhood CEO Vlad Tenev said the company is developing earnings contracts for its prediction markets hub, which would allow customers to trade on individual companies' earnings per share, revenue, and other financial performance metrics.

CFO Shiv Verma also highlighted Robinhood’s recent partnership with digital asset and prediction market platform Crypto.com and OG.com, an event contracts and prediction market platform launched by Crypto.com in February.

According to Verma, Robinhood received an initial 1% equity stake in Crypto.com and OG.com without any cash investment, with the potential to increase its ownership to as much as 10% based on the companies' future collaboration.

The company also received authorization to expand into Dubai and reported in-principle approval for Singapore. Meanwhile, average daily event contract volume was up about 10% to start Q4, while its no-annual-fee Robinhood Gold Card had reached 1.3 million customers and $19 billion in annualized payment volume.

Despite Current Weakness, Analysts See Big Upside Potential

Recent weakness in share price aside, Wall Street still views Robinhood favorably.

Overall, HOOD receives an analyst consensus Moderate Buy rating, with 29 of the 35 analysts currently covering the stock assigning it a Buy.

The $127.45 average price target suggests around 40% upside potential from current prices.

While still an area of concern, short interest suggests bearish sentiment may be easing.

As of Oct. 15, 4.69% of Robinhood's float was sold short, representing an 8.8% decrease in short interest from the previous reporting period. The $3.8 billion worth of shares sold short is also nearly 50% below the multi-year high of $7.56 billion recorded on Sept. 30, 2025.

Meanwhile, institutional ownership remains robust. Over the past 12 months, 920 institutional investors purchased $14.53 billion worth of shares, compared with 480 sellers disposing of $6.1 billion worth.