Robinhood (HOOD) Pre-earnings Analysis
Shares of the popular stock and crypto trading platform Robinhood have been suffering since the company’s last earnings report. The stock is down more than 40% in the last three months, leaving investors anxious about today’s earnings report.
First thing to note about Robinhood is that it is a relatively young company battling in a very competitive industry, however they have managed to gain popularity with retail traders. Their gamification of the stock market has created a revolution, sparking large adoption among the younger generation. This business model has worked well for them, the company’s revenue has grown from about $1B in 2020 to $3B in 2024. Today’s earnings would wrap up Q4 of 2025, which is expected to reach $4.5B. This growth is attributed to mass adoption, expansion into crypto and polymarkets.
Apart from revenue, profits will be a big focus. After years of losing billions, Robinhood turned profitable in 2024 and hasn’t looked back. Their margins are impressive at 38-43% in the last two quarters, leaving them at a price to earnings ratio of 34x…one of the cheapest it’s ever been.
If Robinhood is a good stock, why is it selling off?
Because it is tied to retail trading activity - if risk is off, the stock looks unattractive. In the last quarter, we’ve seen a massive correction from the crypto market and from a large number of high growth stocks. When high growth is under pressure, high Beta stocks like Robinhood see a big dip. Another threat is a slowdown of trading activity, which would immediately impact Robinhood’s revenue.
Earnings:
Robinhood is at an attractive range to start a position here, but an earnings confirmation to scale higher may be best. If they have another strong quarter as they did in the past 12 months, it could reignite confidence and send them back to 100+.
Option chain analysis:
HOOD’s options expiring on 02/20 currently have a 95% implied volatility reading, which translates to about a (+/-) $11 move from the stock. The direction will depend on earnings results.
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