Why Robinhood Stock Crashed After Earnings

Robinhood (NASDAQ: HOOD) banal tumbled 12.5% done 10:30 a.m. ET Wednesday aft reporting mixed results for Q4 net past night.

Heading into the report, analysts forecast the online brokerage would gain $0.64 per stock connected much than $1.3 cardinal successful sales. Robinhood bushed the net forecast with a per-share nett of $0.66, but missed connected sales, reporting conscionable nether $1.3 billion.

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Q4 income climbed 28% twelvemonth implicit year, with 39% maturation successful involvement income driving the result. "Transaction-based revenues" (i.e., trading) roseate lone 15%. Average gross per idiosyncratic (ARPU) grew a akin 16%.

This led to a large driblet successful net for the 4th -- down 35% contempt beating estimates.

For each of 2025, Robinhood scored 52% income maturation to $4.5 billion, with net up 31% astatine $2.05 per share.

That close determination tells you wherefore investors are upset with Robinhood. Q4 was a disappointment aft Robinhood's gangbusters maturation earlier successful the year. Investors are shrugging disconnected the net bushed and wondering: if income slow, is Robinhood inactive a maturation stock?

That's a valid concern.

Consider: Priced astatine $77 cardinal successful marketplace cap, Robinhood banal costs conscionable nether 37 times trailing earnings. That doesn't look costly fixed the maturation crossed 2025, but if net support shrinking (as they did successful Q4), the valuation gets concerning.

Free currency travel astatine Robinhood is $1.6 cardinal for 2025 -- amended than burning cash, arsenic Robinhood did successful 2024. Still, escaped currency travel backs up lone 84% of Robinhood's reported profits, truthful erstwhile valued connected a price-to-free currency travel ratio, the banal is arguably adjacent much costly than it looks, valued connected earnings.

Much arsenic I'd similar to urge it, Robinhood looks similar a merchantability to maine close now.

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