Robinhood: Buy After Crypto Reset

Summary Robinhood Markets, Inc. offers a compelling opportunity after a sharp pullback driven by weak Q4 crypto revenues. HOOD's revenue growth opportunity is fueled by options transactions, prediction markets, and net interest income, not solely crypto trading. The prediction markets present a massive long-term growth runway, with potential for 10x-15x business expansion by 2030. Despite competitive threats and a 31x 2027 EPS multiple, current pessimism offers a compelling entry point for long-term investors. Robinhood Markets, Inc. ( HOOD ) reported phenomenal results for 2025 , sending the stock to the stratosphere. The stock was due for a pullback, but now the financial services company has collapsed due to weak crypto numbers in Q4. My investment thesis is ultra Bullish on the stock after this crash, though Robinhood might need to fall to even $60 before bottoming. Source: Finviz Crypto Crash Dilemma Robinhood has a booming business with revenues surging from options transactions, prediction market growth, and a surge in net interest income. The revenue wasn't actually surging due to crypto transaction revenues, so the recent crypto dip isn't likely to crush the financials to start 2026. Source: Robinhood Markets Q4'25 presentation Robinhood reported Q4 '25 revenues grew by 27% to reach $1.28 billion. The crypto transaction revenues were only $221 million, down substantially from the record Q4'24 revenues of $358 million. The segment did report a big jump in 2025 over the minimal revenues until last Q4. The market wasn't expecting any big growth with crypto weakening in Q4. Bitcoin (BTC-USD) has now collapsed below $70K and has spent most of Q1 so far below 2025 levels. Robinhood clearly faces a period where trading transactions and volumes will likely be lower. The company generated more revenue from options transactions in Q4 at $314 million, but the growth mostly stalled sequentially. Either way, the financial market weakness is likely to pressure overall revenues. The January metrics aren't impressive, with crypto trading volumes down 57% to only $8.7 billion and options contracts traded only growing 20% YoY versus the 38% growth rate in Q4. As of yet, analysts haven't really cut revenue estimates for the current period. Bitcoin was up at $90K only a few weeks ago, so the major crypto and stock crash going on now wasn't present in the January metrics. Either way, investors need to understand both crypto and prediction market volumes are only a fraction of the future potential. A report suggests the prediction market could reach $1 trillion in trading volumes by 2030, up from only an estimated $63.5 billion. With an equal market share, Robinhood could see the business grow 10x to 15x. Prediction markets revenue hit ~$110 in Q4 and roughly $300 million for all of 2025 on 12 billion contracts. Robinhood has already reached 3.4 billion contracts during January and February has the Super Bowl and Olympics. The biggest concern is new entities launching prediction markets from Coinbase ( COIN ) to DraftKings (DKNG). Robinhood has a head start on these companies, but it's also behind private companies like Kalshi and Polymarket. Valuation Reset Robinhood's consensus revenue forecasts don't predict much in the way of growth in the next 2 years. The 2027 revenue target of only $6.4 billion is less than $2 billion above the 2025 estimate of $4.5 billion, up less than 20% annualized growth over the 2-year period. Data by YCharts The company now has 11 products with over $100 million in annualized revenues. Robinhood is still early in the game with crypto, prediction markets, and even the Gold subscriptions. The crypto reset offers a far better entry point into the stock. Robinhood still trades at 10x the 2027 sales targets of $0.4 billion, with the market cap slumping below $70 billion. Robinhood traded at a high just a few months ago above $150, so the market has clearly readjusted prospects for the business. The current crypto winter will likely end and lead to higher trading in the future, especially with the government only now supporting stablecoins, leading to actual functionality in the space. The stock still trades at 31x EPS targets for 2027. An investor probably wants to see a bigger selloff with the current downtrend probably not over. The biggest risk is that crypto and prediction markets are far more competitive entering 2026 than at the start of 2025. Robinhood is heading towards a finance SuperApp and could easily be the dominate player in the segment, but the company isn't guaranteed to win, and the competition could squeeze the transaction prices in crypto and cut the profits from the segment. The surviving players might win market share but lose out on rewarding shareholders. Takeaway The key investor takeaway is that the market continues to trade with extremes and apparently values Robinhood based on crypto trading volume tied to bitcoin prices. Investors should use the current pessimism to buy HOOD stock on further dips. The crypto winter isn't likely to last, and Robinhood will ride crypto prices higher in the future.