Crypto Sell-Off Pulls Robinhood Stock Down: Buy Before It Takes Off?

Robinhood Markets’ HOOD shares are down almost 30% this year. The primary reason behind bearish sentiments is the sell-offs in cryptos, especially Bitcoin. From approximately $88,000 at the start of the year, Bitcoin has slipped to nearly $68,000 because of a risk-off macro backdrop (stronger dollar and weaker equities) and tariff/policy uncertainty. 

This sell-off in cryptos has pulled HOOD’s shares down, as a big slice of its transaction revenues comes from crypto trading. When prices slide, customers trade less, spreads shrink and crypto revenues fall. In January 2026, the company reported 44% year-over-year plunge in crypto Daily Average Revenue Trades (DARTs) to 0.5 million. Even in the fourth quarter of 2025, it recorded a 38% drop in crypto revenues, thereby putting pressure on the stock despite strength in options, equities and interest income.

Unlike Robinhood, its close peers, Charles Schwab SCHW and Interactive Brokers IBKR, have fared better amid crypto sell-offs.

2026 Price Performance
 

Robinhood has been focused on the cryptocurrency space through increased tokenization, enhanced platform capabilities and expansion into EU markets, and is expected to drive greater cost efficiency and revenue growth in the future. The company is actively pursuing Markets in Crypto-Assets Regulation (MiCA) licenses, which would enable it to offer crypto services across the European Economic Area, expanding reach to 27 countries.

Additionally, the acquisition of Bitstamp (closed in June 2025) and the impending WonderFi deal (expected to close in the first half of 2026) align with this broader strategy. Currently, HOOD supports several major cryptocurrencies, including Bitcoin, Ethereum, Dogecoin, Litecoin, Solana and Toncoin. 

As the platform diversifies and enhances its offerings, Robinhood’s crypto revenues are well-positioned for growth, supported by heightened investor interest in crypto as both a return-generating and diversification tool. Through this, the company is likely to better cross-sell into subscriptions, cash and other services, which will further drive the top line. 

However, the recent pullback in crypto is a clear wake-up call for Robinhood. To reduce earnings volatility, the company needs to further diversify its revenue base beyond any single product line. The key question is whether the market’s pessimism toward HOOD is justified or whether the selloff has gone too far. Let’s evaluate the company’s fundamentals and near-term catalysts to gauge the stock’s risk-reward and overall investment appeal.

Other Factors That Could Hurt Robinhood’s Prospects

Litigation & Probes: Robinhood operates in a heavily regulated space, leaving it vulnerable to fines and oversight actions that can constrain growth. Recent probes underscore this risk: Florida is investigating Robinhood Crypto for deceptive marketing, while Lithuania’s central bank is reviewing its tokenized equity products. Between 2023 and 2025, the company also paid more than $80 million in fines across securities violations, identity-verification failures, crypto withdrawal issues and product-oversight shortcomings. Together, these actions highlight Robinhood’s ongoing compliance challenges.

Dependence on Volatile Revenue Streams: A large portion of HOOD’s business is tied to transaction-driven activity, including options trading, equities turnover and crypto trading. These categories are highly sensitive to market cycles, investor sentiment and shifts in risk appetite. During periods of volatility or bullish momentum, revenues can surge, but the metric can fall just as quickly when markets cool, trading volumes fall or retail engagement declines. This creates an inherently uneven earnings profile, making Robinhood’s results less predictable and more exposed to macro and sentiment-driven swings than traditional, fee-based financial firms.

Major Factors to Support Robinhood Stock

Product Launches & Global Expansion: Robinhood is boosting growth through aggressive product innovation and global expansion, positioning itself as a next-generation fintech ecosystem.

Major 2025 launches include Robinhood Cortex, an AI assistant that allows users to build custom indicators, analyze markets and access real-time AI-driven news insights. The Legend platform enhances advanced trading with futures access, short selling, simulated options returns and nearly 24/5 index options trading. Robinhood Social introduces a verified trading community for sharing strategies and tracking expert portfolios, with copy trading coming soon. 

Further, banking services and a Gold credit card extend Robinhood’s reach into personal finance, aiming to become a digital banking alternative. AI integration and rapid product rollouts are driving engagement and monetization through premium tiers. Social and community features aim to boost retention and virality, while expanded trading tools attract both retail and professional users.

Globally, Robinhood is pioneering tokenized U.S. stocks and ETFs across 31 EU and EEA countries, offering 24/5 commission-free trading and plans to tokenize private companies. Broader crypto services, a proprietary blockchain and future global banking products are underway. With new offices in Toronto and plans for Asia-Pacific growth via acquisitions of Indonesia-based PT Buana Capital Sekuritas and PT Pedagang Aset Kripto, Robinhood seeks to diversify revenues and establish itself as a global fintech leader by blending traditional finance and digital innovation.

Business Diversification Efforts: Robinhood has evolved from a brokerage firm primarily trading in digital assets to a more mature and diversified entity, striving to expand its market reach. Looking at the numbers, in 2021, it mainly relied on transaction-based revenues (almost 75% of total revenues) to generate income. In 2025, this came down to 59%.

HOOD is betting big on the lucrative prediction markets and, in a partnership with Susquehanna International Group, acquiring a 90% stake in MIAX Derivatives Exchange (a CFTC-licensed derivatives exchange). Through this, the company intends to launch a dedicated futures and derivatives exchange and clearinghouse by 2026. 

Robinhood’s other initiatives underscore its ambition to evolve into a full-scale financial services platform. In February, the company acquired TradePMR, an asset under administration custodian and portfolio management platform for Registered Investment Advisors, strengthening credibility in wealth management and positioning it to compete directly with incumbents like Schwab.

Likewise, Interactive Brokers and Schwab have been expanding their product suites aggressively. IBKR has added daily options on European indices and broadened crypto trading capabilities, including stablecoin funding and staking. Interactive Brokers also launched "Connections," a proprietary feature integrating global markets to provide clients access to stocks, options, futures, currencies and bonds across more than 160 markets worldwide. 

Meanwhile, Schwab announced a deal to acquire Forge Global Holdings, Inc. for roughly $660 million in cash. This aligns with the company’s strategy to offer private market capabilities to retail and advisor clients, leveraging its comprehensive suite of wealth, advisory and investment management solutions, to address the complex needs of investors.

Strong Balance Sheet: Robinhood is on solid ground, with significant cash reserves. As of Dec. 31, 2025, it reported cash and cash equivalents of $4.26 billion.

In 2024, Robinhood announced a share buyback plan (for the first time) to repurchase up to $1 billion of its outstanding common stock. In April 2025, the company increased its existing authorization by $500 million to $1.5 billion. 

As of Dec. 31, 2025, almost $590 million worth of shares remained available for repurchase. HOOD plans to complete the remainder of its total authorization over roughly the next two years.

Buy, Sell or Hold Robinhood Shares Amid Crypto Sell-off?

Because of recent concerns over crypto sell-off and weakness in crypto trading volume, analysts are turning bearish on HOOD stock. Over the past week, the Zacks Consensus Estimate for earnings for 2026 and 2027 has been revised lower to $2.36 and $2.82 per share, respectively. 

Estimate Revision Trend
 

The Zacks Consensus Estimate for HOOD’s earnings implies 15.1% and 19.5% year-over-year growth for 2026 and 2027, respectively. Also, the consensus mark for 2026 and 2027 revenues indicates a year-over-year rise of 22.1% and 16.3%, respectively.

Sales Estimates
 

Robinhood’s business transformation is far beyond its brokerage roots. Rapid product innovation continues to deepen client engagement and expand monetization. Global expansion efforts further strengthen its positioning as a next-generation fintech platform.

Major moves into prediction markets, wealth management and crypto infrastructure highlight HOOD’s maturing, diversified business model. Further, strategic acquisitions and expansion efforts reinforce growth potential. With a strong balance sheet and buybacks, Robinhood stock looks like a compelling bet. 

Nonetheless, HOOD’s shares trade at a massive premium to the industry. At present, the company has a price/tangible book (P/TB) of 8.48X for the trailing 12 months compared with the industry average of 3.11X.

Robinhood’s P/TB TTM
 

Moreover, HOOD stock is expensive compared with Schwab and Interactive Brokers. Schwab and Interactive Brokers have a trailing 12-month P/TB of 7.43X and 1.63X, respectively.

After a roughly 30% slide this year, Robinhood looks set up for a rebound, but the path is unlikely to be smooth. Without greater stability in crypto prices, trading activity and the stock could remain volatile. HOOD also carries a sizable valuation premium versus peers, which may cap near-term upside. Still, existing holders can stay the course, supported by strong liquidity, business diversifying efforts and decent earnings momentum.

At present, HOOD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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