Robinhood Stock (HOOD) Down Into The Open As Analysts Move Targets Lower

Robinhood Markets stock (NASDAQ: HOOD) tumbled 9.84% in pre-market trading to $77.18 following a mixed fourth-quarter earnings report that saw the fintech platform miss revenue expectations despite posting record annual profits.

The decline comes as markets digested weaker-than-expected transaction revenues and cryptocurrency income alongside higher operating expense guidance for the year ahead.

The company reported fourth-quarter revenues of $1.28 billion, representing a 27% year-over-year increase but falling short of the $1.34 billion consensus estimate. The miss was primarily attributed to a sharp 38% decline in cryptocurrency transaction revenues, which dropped to $221 million as retail enthusiasm for digital assets cooled from earlier highs. Transaction revenue and net interest income both came in below analyst projections, raising questions about the sustainability of growth rates heading into 2026.

Despite the revenue shortfall, Robinhood delivered a net income of $605 million and earnings per share of $0.66, slightly exceeding analyst estimates of $0.63. Average revenue per user climbed 16% year-over-year to $191, demonstrating improved monetization of the platform's growing customer base. Chief Financial Officer Shiv Verma noted that 2025 was a record year with new highs across net deposits, Gold subscribers, trading volumes, revenues, and profits, while expressing confidence about momentum entering 2026.

Operational metrics painted a more encouraging picture beneath the headline numbers. Net deposits surged to $15.9 billion in the fourth quarter, contributing to annual net deposits of $68 billion, up 35% from the prior year. Robinhood Gold subscribers reached 4.2 million, marking a 58% year-over-year increase and underscoring strong adoption of the premium subscription service. Assets under custody grew nearly 70% year-over-year to $324 billion, reflecting deepening customer engagement and trust in the platform.

Analyst responses to the earnings report were swift, with several firms lowering price targets while maintaining cautious optimism about the company's long-term trajectory. JPMorgan reduced its target from $130 to $113, keeping a Neutral rating on the shares. The firm highlighted that tough 2025 comparisons create a high bar for performance in 2026, suggesting the company faces challenging year-over-year growth metrics ahead.

Piper Sandler cut its price target from $155 to $135 but retained an Overweight rating, acknowledging short-term headwinds while reaffirming its long-term investment thesis. The firm described Robinhood as the best way to play secular growth in retail trading and the closest fintech platform to achieving super app status, noting that investors willing to stomach near-term volatility could benefit from the company's strategic positioning.

The modestly higher-than-expected operating expense guidance added to market concerns, suggesting increased investment spending as Robinhood pursues international expansion and new product initiatives including prediction markets and tokenization. These strategic bets represent potential growth drivers but require upfront capital that may pressure near-term profitability metrics.

The stock's pre-market decline reflects market uncertainty about whether Robinhood can maintain its growth trajectory as cryptocurrency trading volumes normalize and the company faces tougher comparisons against a stellar 2025 performance.

The company's ability to diversify revenue streams beyond crypto-dependent transaction income while controlling costs will likely determine whether the current pullback represents a buying opportunity or a fundamental reset in valuation expectations.