By Andrew Welsch

After a brutal multiday selloff, shares of Robinhood Markets got a break Friday as the stock jumped 14%. It's a relief for the once-highflying stock, but shares are still down about 46% from their all-time closing high of $152 on Oct. 9.

Robinhood's stock has long been a volatile one, but it may take a while before shares reach their former altitude. A confluence of factors has been pulling Robinhood's stock down to earth and they aren't going away anytime soon.

Some investors have likely sold shares to reap profits after the stock's stunning run-up in 2024 and 2025. But the selloff in cryptocurrencies has clearly played an important role because Robinhood, which has been growing its customer base among active traders, generates a sizable chunk of its revenue from crypto trading. It's no coincidence that Robinhood stock's fall mirrors that of the CoinDesk Bitcoin Price Index (XBX), which as of Thursday afternoon was down 50% from its all-time intraday high of $126,272.76 on Oct. 6, according to Dow Jones Market Data. On Friday, Bitcoin was up 12%.

For the nine months ending Sept. 30, Robinhood generated $1.85 billion in transaction-based revenue; crypto represented $680 million, or about 36%, of that. Options trading generated $809 million in revenue.

When the company reports fourth-quarter earnings on Tuesday, it will likely show that Robinhood benefited late last year from the continuing bull market which has enticed investors to trade more, including on margin, meaning they borrow money from their brokerage firm to buy stocks. Total margin debt stood at a record $1.2 trillion as of December, according to data from brokerage industry self-regulator Finra.

The bull market isn't dead of course. But "growing uncertainty about the sustainability of recent retail trading strength" is a factor in Robinhood's selloff, Piper Sandler analyst Patrick Moley writes in a Feb. 2 research note. The S&P 500 is flat for the year. If individual investors' trading frenzy wanes, then that could put a dent in Robinhood's revenue.

Moley rates the stock Overweight and remains optimistic about its prospects. He has a price target of $155 per share. "Long term, we continue to believe Robinhood is the best way to play secular growth in retail trading and the closest fintech platform we've seen to achieving 'super app' status," he writes.

Super app status. Robinhood's "super app" ambition is to become customers' go-to for all their financial needs. The company has been expanding into credit cards, banking, financial advice, and more. These efforts may help Robinhood win wallet share with its customers and provide ballast to offset declines in trading-related revenue. But they're still relatively nascent efforts, and not yet big contributors to revenue. Of Robinhood's $1.1 billion in net interest revenue for the nine months ending Sept. 30, credit cards contributed just $40 million.

"Management has proven execution capabilities, but we still see a meaningful gap between the products offered and scale of Robinhood versus its larger competitors," J.P. Morgan analyst Kenneth Worthington writes in a Feb. 4 research note." He rates the stock Neutral, "given the competitive environment and varied outlook."

Predictions play. Of all Robinhood's new products and services, the fastest-growing has been its prediction markets offering, which enables investors to bet on the outcome of events via binary yes/no contracts. Robinhood makes a variety of event contracts available, but the most popular topic has been sports. Moley estimates that college and professional football made up roughly half of Robinhood's prediction market volumes from September to January.

The NFL season is winding down (the Super Bowl is Sunday). Although there are more sporting events on the horizon -- basketball, the Winter Olympics, the World Cup -- some investors may be wondering about the sustainability of prediction market-related revenue. Will football gamblers show up for Olympics betting in February in the same numbers? Will they be equally crazy for March Madness?

For investors, it would be unwise to bet against Robinhood, especially after such a sharp downdraft, from which it is now, apparently, recovering. The company has been steadily rolling out new services, and has navigated periods of uncertainty before: The stock price recovered after being in the doldrums in 2021 and 2022. But it may take a while before the stock price reaches the cruising altitude it achieved last year.

Write to Andrew Welsch at andrew.welsch@barrons.com

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February 06, 2026 16:39 ET (21:39 GMT)

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