Stock Analysis
Robinhood Markets, Inc. (HOOD)
NASDAQ: HOOD · Retail Brokerage / Financial Technology
Updated
Rated Watchlist, with a fair value of $101.02 against a last close of $94.56 (+6.83% implied upside). Event-contract revenue passed the test at $173m, but crypto revenue fell 55%, interest revenue fell and GAAP EPS dropped to $0.51, so the base case slips to $101.75 and the Watchlist holds with interest at $79 to $84.
- Verdict
- Watchlist
- Fair Value
- $101.02
- Investment Score
- 63.5/100prev 63.5
Technical read (chart only): Conflicts as of Before the results the price was reclaiming its 200-day average with the 50-day still rising, a chart turning ahead of the fundamentals. Watch whether the 200-day holds after the results reaction; a close below the 60-day closing low would cancel the recovery.The Watchlist verdict comes from the fundamentals alone. The technical read looks only at the price chart. It does not change the verdict or the score and only guides entry timing.
Investment Scorecard
Composite score 63.5/100 (previous 63.5). Every factor is scored out of 10, ten always being the best outcome, including for risk.
| Factor | Score | Weight | Change | Basis |
|---|---|---|---|---|
| Business Quality | 7/10 | 15% | unchanged | Strong product cadence and record volumes; revenue still swings with retail trading and crypto. |
| Financial Strength | 8/10 | 15% | unchanged | No meaningful net debt; $808m of adjusted EBITDA in the quarter. |
| Competitive Advantage | 7/10 | 15% | unchanged | Share gains in options and equities; relies on outside exchanges for event contracts. |
| Management | 7/10 | 10% | unchanged | Expense outlook trimmed; less direct on Rothera, KPI timing and 2027 costs. |
| Growth Potential | 7/10 | 15% | unchanged | Event contracts beat the test; crypto and interest revenue fell. |
| Valuation | 5/10 | 20% | unchanged | 34x base-case 2027 clean EPS, with about 8% to the base case. |
| Risk (10 = lowest risk) | 3/10 | 10% | unchanged | State action on sports contracts, crypto and volatile earnings. |
Recent Developments
| Date | Development | Impact |
|---|---|---|
| Q3 2026 results Revenue $1.42bn (+12%); event contracts $173m against $156m in Q2; crypto $120m (-55%); net interest revenue $415m (-9%); GAAP diluted EPS $0.51 and adjusted EPS $0.60, after a $67m venture-fund loss. Management said October event-contract volumes started about 10% above the Q3 pace. Reading: Passed the event-contract test, but crypto and interest income fell by more; the base case slips slightly and the rating holds on new grounds. | High | |
| 2026 expense outlook Adjusted operating expenses and stock compensation $2.675-2.75bn, top end cut by $25m; 2027 plan in January-February (company). Reading: Cost discipline supports margins while revenue mix shifts. | Medium | |
| Ohio action on prediction markets Robinhood was among 10 operators and brokers ordered to stop sports event contracts by 16 October; on 20 October the state's casino regulator told its licensees to confirm by 30 October that they do not support such contracts. Reading: Keeps state risk live on the line that carried the quarter; the call did not address it. | Medium | |
| International licences Dubai authorization received, in-principle approval in Singapore, Canada live (management, Q3 call). Reading: Long-dated optionality; no near-term earnings effect. | Low |
Key Risks
| Risk | Probability | Severity | Comment |
|---|---|---|---|
| State action on sports contracts | High | High | Ohio is pressing operators and its own licensees; more states could follow. |
| Valuation and volatility | High | High | 34x base-case 2027 clean EPS; ATR 5.7% of price. |
| Retail risk appetite | Medium | High | A risk-off market cuts every trading line at once. |
| Crypto activity | High | Medium | Revenue -55% in Q3 and spreads tighter in October. |
| Earnings quality | Medium | Medium | Venture-fund marks swing reported EPS by $0.20 a share between quarters. |
| Rate path | Medium | Medium | Net interest revenue fell on the year despite higher rates. |
| Insider selling | High | Low | Regular sales by founders and officers. |
Scenario Analysis
| Case | Probability | Fair Value | Outlook |
|---|---|---|---|
| Bull | 25% | $145.20 | Event contracts keep growing with no new state orders, KPI options launch, crypto steadies and trading volumes hold near records. 2027 clean EPS $3.30 at 44x. |
| Base | 48% | $101.75 | Event contracts grow modestly, crypto stays weak, interest revenue flat; expense discipline holds. 2027 clean EPS $2.75 at 37x. |
| Bear | 27% | $58.80 | More states act against sports contracts, crypto keeps falling and a risk-off market cuts volumes. 2027 clean EPS $2.10 at 28x. |
The Case
Robinhood passed the test the last report set, with event-contract revenue of $173m against $156m, and kept gaining share in options and equities. But crypto revenue halved, net interest revenue fell on the year and GAAP EPS dropped to $0.51, so the base case slips to $101.75 on 2027 clean EPS of $2.75 at 37 times, about 8% above the pre-results price against a bear case near $59. The rating stays Watchlist and the name becomes interesting at $79 to $84, or on a fourth quarter with event contracts growing, crypto steadier and no new state orders.
Archived Reports
Beating The Bull keeps every past version of this report on file. Verdicts and numbers reflect what was known when each one was published.
Informational use only. Not financial advice.