Robinhood Stock Plummets 13% as Crypto Slump and Rising Costs Sour Q1 Earnings

Quick overview

Shares of Robinhood Markets Inc. (NASDAQ: HOOD) cratered more than 13% Wednesday to close at $71.20 after the retail-trading juggernaut disclosed first-quarter results that fell short of Wall Street’s expectations. A large sell-off followed a boom in prediction markets and record growth in its premium “Gold” subscription tier, but, a sharp slowdown in cryptocurrency trading and a revised-up forecast for expenses led to this massive sell-off.

Robinhood Q1 Earnings: A Miss on Top and Bottom Lines

Robinhood reported first-quarter sales of $1.07 billion, below the $1.14 billion expected by analysts. Earnings per share (EPS) was $0.38, vs the consensus forecast of $0.39 to $0.40. +1

Total revenue increased 15.4% year-over-year but investors were anxious about the composition of that growth. The company’s once-volatile cryptocurrency business posted revenue of $134 million, down 47% from a year earlier. Crypto now makes up only 13% of overall income, down from 17% in the last quarter, a sign of a broader market retreat from digital assets in early 2026.

The Silver Lining: Prediction Markets and “Gold”

Not all segments were laggards. Robinhood’s move into prediction markets (event contracts) became a breakout hit. The sector traded a record 8.8 billion units in Q1, which generated annualized revenue of $415 million. Losses from bitcoin were partly mitigated by a 320% increase in “other transaction revenue” +1

Other key highlights included:

• Robinhood Gold: Subscriptions grew 36% year-over-year to 4.34 million, indicating the loyalty of the platform’s most active users.
• Net interest revenue increased 24% to $359 million, driven by a record margin book of $17 billion.
• Equities Revenue: Climbed 46% to $82 million, which means that old-school stock trading is still a dependable pillar of the business.

HOOD Investors Fear Rising Expenses and Future Bets

Investor nervousness was also exacerbated by Robinhood’s amended 2026 outlook. The company boosted its forecast for annual operating expenses and stock-based compensation by $100 million to $2.7 billion to $2.825 billion.

Management said the funding was vital for ambitious new verticals. CFO Shiv Verma said the firm will soon launch Rothera, a joint-venture exchange with Susquehanna, that would vertically integrate the firm’s trading infrastructure. Robinhood has recently landed a high-profile agreement with the U.S. Treasury and BNY to be the exclusive first trustee for “Trump Accounts,” tax-advantaged investing accounts for children. The firm alone will pump $100 million into this project. +1

Market Reaction and Analyst Outlook for Robinhood (HOOD) Stock

The stock dropped by 13.24% on Wednesday, bringing its year-to-date slump to over 38%. Recent reports showed that CTO Jeffrey Pinner sold roughly $490,000 in company stock just days before the earnings release, adding to the pessimistic sentiment. However, the transactions were part of a pre-scheduled Rule 10b5-1 trading plan.

Some analysts are still bullish despite the carnage. Bernstein kept its price target at $130, saying that the crypto slump is temporary and that the relationship with “Trump Accounts” is a “historic milestone” for a prospective public-sector firm. Still, the stock comes under pressure to hit yearly lows of about $71 and Robinhood has a long road ahead to convince the market that it can reach sustainable, high-margin growth.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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