Best Stocks to Buy in the Selloff: Buy HOOD Down 50% Before Earnings?

Robinhood Markets, Inc. HOOD stock skyrocketed to all-time highs in October as it flexed its growing credentials as a diversified digital brokerage powerhouse.

HOOD transformed from an upstart stock-trading app that became famous in the early months of Covid into an S&P 500 giant and a direct competitor to Fidelity and other online brokerages. 

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Despite its roughly 50% drop from its highs, the boundary-pushing financial services firm has soared 650% in the past two years to more than triple Nvidia and blow away many other artificial intelligence stocks.

Robinhood grew overheated and was due for a healthy recalibration. Its earnings and revenue growth outlook remain strong even as it gets caught in fears surrounding bitcoin, AI disruption, and beyond.

It is far more than an app for meme-stock traders. Today, HOOD boasts that its 11 separate business lines each generate ~$100 million or more in annualized revenues.

HOOD is approaching some very attractive technical levels for traders and long-term investors to start buying the stock heading into its Q4 earnings release on Tuesday, February 10.

The growth stock is approaching its post IPO breakout peak from 2021. Robinhood’s average Zacks price target offers 86% upside to its current price, and it’s trading at its most oversold RSI levels in history.

Why Investors Should Buy Robinhood Stock

Robinhood might still be viewed as a meme-stock-mania-app to a large pocket of investors. But that company and its users have come a long way since it first disrupted the industry with commission-free stock trading, which is now standard across most digital brokers, including Fidelity.

HOOD is growing into a legitimate rival to Fidelity, catering to a large swath of investors and sophisticated traders with a growing portfolio. The company is now an S&P 500 member after it joined the illustrious group in September. 

HOOD said last quarter that it has “11 business lines each generating ~$100 million or more in annualized revenues.” The company offers retirement accounts, crypto trading, futures, options, a browser-based desktop trading platform built for active traders, wealth management, prediction markets (to take on Polymarket), and more.

The firm’s paid Gold Subscribers increased by 77% YoY in Q3 to 3.9 million, while total investment accounts increased by 2.8 million, or 11% to 27.9 million.

HOOD’s average revenue per user soared 82% to $191 in the third quarter as part of a 100% YoY jump in total quarterly sales. Meanwhile, its earnings per share soared 259% to $0.61, helping it crush our bottom-line estimate for the fourth quarter in a row (26% average beat).

Robinhood is projected to grow its adjusted EPS by 85% in 2025 and another 23% in FY26 to reach $2.48 a share, vs. a -$0.60 loss in 2023 and +$1.09 a share in 2024. HOOD’s 2026 earnings outlook has jumped 9% over the last few months and 63% since last summer.

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The nearby chart shows that HOOD’s earnings outlook has surged over the last two years, including a large charge in the back half of 2025 and recently. On top of that, its Most Accurate estimates came in above its already improved consensus.

Robinhood’s massive EPS expansion is supported by 53% projected revenue growth in 2025 and 22% higher sales in 2026 to hit $5.50 billion, up from $2.95 billion in 2024.

Buy HOOD Stock Now On the Dip and Hold?

The stock overtook its post-2021 IPO highs in the summer of 2025. Despite its 650% run in the past two years, which helped it blow away Nvidia NVDA and many other AI stocks, Robinhood’s selloff has it testing those previous peaks. The bulls attempted to hold HOOD's 2021 highs on Wednesday.

Robinhood is down nearly 50% from its early October peaks. HOOD is trading at roughly $75 a share, which means its average Zacks price target represents 86% upside from its current levels. The financial tech stock would also have to roughly double (+100%) to get back to its all-time highs of $150 a share.

HOOD was due for a selloff to help it cool off. It is now trading at a 60% discount to its highs at 35.7X forward 12-month earnings.

Robinhood also trades at a 75% discount to its highs in terms of its price/earnings-to-growth (PEG) ratio at 1.3, roughly matching the Zacks Tech sector—HOOD is up 130% since its IPO vs. Tech’s 70% climb during that period. 

Some investors might want to test the waters on Robinhood now, and then see how Wall Street reacts when it reports its Q4 results and offers near-term guidance next week. 

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

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