Should Robinhood Shares Be in Your Portfolio Pre-Q2 Earnings?

Robinhood Markets HOOD is set to announce second-quarter 2025 results on July 30 after market close.

Robinhood’s first-quarter 2025 performance was impressive. Results benefited substantially from higher equity trading amid heightened volatility, higher net interest revenues and a jump in the number of Gold subscribers. Additionally, the company reported an increase in Monthly Active Users. This largely supported the top line, which jumped 50% year over year.

HOOD is expected to have witnessed solid revenue growth in the second quarter as well. The Zacks Consensus Estimate for quarterly sales of $915.2 million suggests a 34.2% rise on a year-over-year basis. 
 
Further, Robinhood has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and lagged once, with the average beat being 20.59%.

Earnings Surprise
 

In the past week, the consensus estimate for earnings has remained unchanged at 31 cents. This indicates a jump of 47.6% from the prior-year quarter. 

HOOD’s Earnings Estimates
 

Is now the right time to add HOOD stock to your portfolio just before its earnings release, or wait? Before we decide this, let’s analyze the factors that are likely to have impacted its quarterly performance this time.

Factors to Note & Estimates for HOOD’s Q2 Results

Revenues: During the second quarter, client activity was robust, driven by heightened volatility amid tariff policy concerns. Hence, Robinhood’s transaction revenues are expected to have soared like its peers, Interactive Brokers IBKR and Charles Schwab SCHW.

Interactive Brokers, which released second-quarter results on July 17, witnessed a 27.1% year-over-year jump in commissions. Further, Schwab, which announced quarterly numbers on July 18, recorded 22.5% growth in trading revenues.

The Zacks Consensus Estimate for HOOD’s transaction-based revenues is pegged at $508.4 million, indicating a 55.5% jump from the prior-year quarter. This is likely to have been driven by higher options, equity and cryptocurrencies transaction revenues.

The consensus estimate for options transaction revenues is $252.2 million, suggesting 38.6% growth. Further, the Zacks Consensus Estimate for equity and cryptocurrencies transaction revenues is pegged at $68.1 million and $156.1 million, respectively. Equity transaction revenues are projected to surge 70.2%, while cryptocurrencies transaction revenues are estimated to jump 93.2% year over year.

Further, relatively higher interest rates are expected to have supported Robinhood’s NII in the to-be-reported quarter, given no rate cuts by the Federal Reserve amid tariff-related headwinds. The consensus estimate for NII is $307.8 million, implying an 8% rise.

The Zacks Consensus Estimate for other revenues is pegged at $96 million, suggesting a 37.2% increase from the prior-year quarter.

Expenses: Total operating expenses are likely to have remained elevated as the company invests in key areas to enhance platform capabilities, drive product innovation, improve customer support and build upon regulatory and compliance functions. Also, the pending acquisition of WonderFi Technologies is likely to have incurred some restructuring/merger-related charges during the quarter.

What Our Model Unveils for Robinhood Stock

Our quantitative model predicts an earnings beat for Robinhood this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is just the case here, as you can see below.

Earnings ESP: Robinhood has an Earnings ESP of +0.81%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: It sports a Zacks Rank #1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

HOOD Stock Price Performance & Valuation

Robinhood’s shares have had a remarkable run on the bourses since the beginning of the year. In the first half of 2025, the stock soared a whopping 151.3% outperforming the industry’s growth of 17.9%. Moreover, it fared better than Schwab’s rise of 23.3% and Interactive Brokers’ rally of 25.5% during the same period.

HOOD’s First-half 2025 Price Performance
 

Now, let’s look at the value Robinhood offers investors at current levels.

Currently, HOOD is trading at 12.62X 12-month trailing price/tangible book (P/TB), above its three-year median of 5.05X. Meanwhile, the industry’s P/TB TTM multiple is 2.98X. Hence, the stock is trading at a steep premium compared with the industry.

HOOD P/TB TTM
 

Investment Thesis for Robinhood

Robinhood is on the right path to expand or diversify its operations. Given the volatility in the stock markets due to several macroeconomic challenges, the company is expected to benefit from rising trading volume. However, tariff-related headwinds, including economic slowdown, may hurt its financials to some extent.

Nonetheless, HOOD’s initiatives to keep adding new products and services and its plans to become a global entity by venturing across the European Union (EU) and the Asia Pacific regions, organically and through buyouts, align with its expansion efforts. Robinhood’s plans to focus on the cryptocurrency space through increased tokenization, enhanced capabilities and expansion into the EU markets will diversify its business. 

Its growing international footprint has been bolstered by tapping into high-growth crypto and fintech markets. Robinhood’s evolving product suite caters to a younger, tech-savvy investor base, while its declining reliance on transaction-based revenue reflects increasing business maturity. Solid liquidity, a $1.5 billion buyback program and robust user growth amid rising digital asset adoption further reinforce investor confidence.

Nevertheless, Robinhood faces mounting regulatory scrutiny, fines and investigations across jurisdictions, raising compliance risks and potentially hindering its growth and expansion efforts. Further, its foray into the banking industry amid intense competition keeps investors cautious about its success.

Buy, Sell or Hold Robinhood Stock Ahead of Q2 Earnings?

Robinhood’s strategic acquisitions and ongoing product diversification efforts position it well for strong second-quarter results. Elevated market volatility likely supported top-line growth. However, investor caution persists amid tariff uncertainties, rising regulatory scrutiny and stiff competition in newly entered sectors like banking.

Even so, Robinhood presents a compelling investment case. Its premium valuation is supported by a rapid evolution into a diversified global financial services platform, expanding beyond retail brokerage into wealth management, advisory and consumer finance.

With second-quarter results on the horizon, now may be an opportune time to invest before the stock climbs higher.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research