Robinhood Markets (HOOD) went into its third-quarter report with one question hanging over it. Could prediction markets keep growing while states pushed back on sports contracts? The last report set a simple test: event-contract revenue at or above the second quarter’s $156 million. Robinhood reported $173 million on 27 October, on a record 16.4 billion contracts traded. That part of the story held up.

The rest of the quarter was thinner. Total net revenue reached a record $1.42 billion, up 12%, but came in slightly below forecasts. Crypto revenue fell 55% to $120 million as volumes dropped and take rates narrowed. Net interest revenue slipped 9% from a year earlier, despite record margin balances and higher policy rates. GAAP diluted EPS fell to $0.51 from $0.61. Two items explain part of that drop: a $67 million loss on the company’s venture fund and a tax rate that rose to about 24%. On the company’s new adjusted measure, which strips out investment gains and losses, EPS was $0.60. Even after both adjustments, underlying earnings were roughly flat on the second quarter. The shares fell in after-hours trading.

There were real positives. Options and equities revenue rose 31% and 41% on record volumes. Net deposits were $15.7 billion and Gold subscribers reached 5.2 million. Management trimmed the top of its 2026 expense range by $25 million and said October event-contract volumes started about 10% above the third-quarter pace. Non-sports contracts grew to about 30% of event-contract activity, which matters because sports are where the legal fight is. Ohio has ordered Robinhood and nine other operators to stop offering sports contracts. On 20 October the state’s casino regulator also told its own licensees to confirm by 30 October that they are not supporting such products. The call did not address state risk.

Those moving parts leave the valuation slightly lower. The base case now uses 2027 clean EPS of $2.75 at 37 times, which gives $101.75, down from $105.50. The weighted fair value is $101.02, about 7% above the pre-results close of $94.56. The bear case sits near $59. That gap does not pay for the risk on the line now carrying the growth, so the rating stays Watchlist. The reasons have shifted, though. The question is no longer whether event contracts survive the quarter. It is whether they can carry the business while crypto and interest income shrink. The name becomes interesting at $79 to $84, where the base case pays roughly 21% to 29%.

The complete Robinhood Markets (HOOD) report, with the earnings restatement and scenario table, is on our Reports page.