Should Investors Buy Robinhood Stock Ahead of Q4 Earnings Release?

Robinhood Markets HOOD is set to announce fourth-quarter and full-year 2025 results on Feb. 10 after market close.

Robinhood’s nine-month 2025 performance was impressive. Results benefited substantially from higher trading activity across all asset classes amid heightened volatility. Also, higher net interest revenues, a surge in Gold subscribers and an improvement in Monthly Active Users (MAU) were tailwinds. This largely supported the top line, which soared 65% year over year.

HOOD is expected to have witnessed solid revenue growth in the fourth quarter as well. The Zacks Consensus Estimate for sales of $1.32 billion suggests a 30.5% surge on a year-over-year basis. 
 
Further, Robinhood has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters and lagged once, with the average beat being 25.75%.

Earnings Surprise
 

In the past week, the consensus estimate for earnings has remained unchanged at 62 cents. This indicates a rise of 14.8% from the prior-year quarter. 

HOOD’s Earnings Estimates
 

Should you buy HOOD stock before its earnings release, or should you wait? Let’s see how things are shaping up before this announcement.

Factors to Note & Estimates for HOOD’s Q4 Results

Revenues: During the fourth quarter, client activity was robust, driven by heightened volatility amid clarity on several macro issues. Hence, Robinhood’s transaction revenues are expected to have increased like its peers, Interactive Brokers IBKR and Charles Schwab SCHW.

Interactive Brokers, which released fourth-quarter results on Jan. 20, witnessed a 22% year-over-year jump in commissions. Likewise, Schwab, which announced quarterly numbers on Jan. 21, also recorded 22% growth in trading revenues.

The Zacks Consensus Estimate for HOOD’s transaction-based revenues is pegged at $809.9 million, indicating a 20.5% increase from the prior-year quarter. This is likely to have been driven by higher options and equity transaction revenues, while cryptocurrencies transaction revenues are likely to have been subdued due to weakness in Bitcoin during the reported quarter.

The consensus estimate for options transaction revenues is $315.3 million, suggesting 42% growth. Further, the Zacks Consensus Estimate for equity and cryptocurrencies transaction revenues is pegged at $86.8 million and $287.1 million, respectively. Equity transaction revenues are projected to surge 42.3%, while cryptocurrencies transaction revenues are estimated to decline 19.8% year over year.

Further, despite interest rate cuts during the fourth quarter, Robinhood’s net interest revenues are expected to have witnessed an impressive rise on the back of higher interest-earning assets and securities lending activity. The consensus estimate for the metric is $432.6 million, implying a 56.1% rise.

The Zacks Consensus Estimate for other revenues is pegged at $81.5 million, suggesting a 77.3% jump from the prior-year quarter.

Expenses: Total operating expenses are likely to have remained elevated as HOOD invests in key areas to enhance platform capabilities, drive product innovation, improve customer support and build upon regulatory and compliance functions. 

The pending acquisitions of WonderFi Technologies, PT Buana Capital Sekuritas and PT Pedagang Aset Kripto are likely to have led to some restructuring/merger-related charges during the fourth quarter. Further, Robinhood’s plan to acquire 90% stake in MIAX Derivatives Exchange,  in partnership with Susquehanna International Group, is also likely to have resulted in some additional expenses.

What Our Model Unveils for Robinhood

Our quantitative model shows that the chances of an earnings beat for Robinhood are high 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 the case here, as you see below.

Earnings ESP: Robinhood has an Earnings ESP of +3.32%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3, 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 last year, with the stock soaring a whopping 203.6%. It has outperformed the industry’s growth of 37%. Also, it fared better than Schwab and Interactive Brokers.

HOOD’s 2025 Price Performance
 

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

Currently, HOOD is trading at 9.98X 12-month trailing price/tangible book (P/TB), above the industry’s P/TB TTM multiple of 3.18X. 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 and 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, while subdued cryptocurrency performance will likely 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. In September 2025, the company joined the S&P 500 Index.

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, Hold or Sell Robinhood Shares Before Q4 Earnings?

Robinhood’s strategic acquisitions and ongoing product diversification efforts position it well for strong fourth-quarter results. Heightened market volatility is likely to have supported top-line growth. Yet, investor caution persists amid tariff uncertainties, rising regulatory scrutiny and stiff competition in newly entered sectors like banking. Also, cryptocurrency weakness is expected to have some adverse impact on the company’s near-term performance.

While Robinhood presents a compelling investment case, supported by a rapid evolution into a diversified global financial services platform, expanding beyond retail brokerage into wealth management, advisory and consumer finance, its premium valuation makes us apprehensive.

With fourth-quarter results on the horizon, it will be wise to wait before making any investment decision.

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

Zacks Investment Research