Robinhood shares slide as revenue growth trails Wall Street estimates
Investing.com -- Robinhood Markets Inc (NASDAQ: HOOD) shares slumped over 6% in premarket trading Wednesday after the Menlo Park-based brokerage reported fourth-quarter revenue that fell short of analyst expectations.
While the company achieved record annual results and an earnings beat, the top-line miss appeared to sour investor sentiment despite a robust surge in its margin book and subscription tiers.
The digital brokerage posted diluted earnings per share of $0.66, outpacing the $0.60 consensus among analysts. However, revenue for the period was $1.28 billion, missing the $1.34 billion mark that Wall Street had projected for the final three months of 2025.
Despite a softer Q4 print, Morgan Stanley analyst Michael Cyprys said Robinhood "enters ’26 with strong product velocity that can support growth."
The company reached a significant milestone with total platform assets climbing 68% year-over-year to $324 billion, fueled by a record $68 billion in net deposits for the full year. Robinhood Gold, the firm’s premium subscription tier, saw its member base swell to 4.2 million users as the company pushes to transition from a pure-play trading app into a comprehensive financial ecosystem.
Transaction-based revenue saw mixed results, with options and equities trading revenue jumping 41% and 54% respectively, while cryptocurrency-related income slumped 38% to $221 million. "Our vision hasn’t changed: we are building the Financial SuperApp," said Vlad Tenev, Chairman and CEO of Robinhood, in the earnings release.
Net interest revenue provided a bright spot, rising 39% to $411 million, as the firm successfully capitalized on securities lending and higher interest-earning assets. This growth helped offset a 38% increase in total operating expenses, which hit $633 million as the company aggressively invested in marketing and integrated recent acquisitions like Bitstamp.
The brokerage also continued its capital return program, repurchasing $100 million in stock during the fourth quarter at an average price of $119.86. Shiv Verma, who recently transitioned into the role of Chief Financial Officer, noted that "2025 was a record year where we set new highs for net deposits, Gold Subscribers, trading volumes, revenues, and profits."
Looking ahead, management signaled a focus on profitable growth, forecasting 2026 adjusted operating expenses and share-based compensation between $2.6 billion and $2.725 billion. This guidance reflects an 18% increase at the midpoint as the company absorbs the full-year costs of its international expansion and the newly formed prediction markets joint venture, Rothera.
"2026 is off to a strong start, and we are incredibly excited about our plan and momentum for the year ahead," Verma added regarding the company’s trajectory. Investors now await further clarity on how the brokerage intends to sustain its momentum in the face of cooling crypto volumes and a potential shift in the interest rate environment.
Although shares are under pressure following the release, Wolfe Reserach analyst Steven Chubak said the "long-term bull case remains intact (attractive valuation given strong
rev/EPS CAGR)."
"We also believe HOOD is more insulated from AI disruption risk (poised to be a net beneficiary as Self-Direct is less susceptible to disintermediation) and should outperform if market jitters around AI continue to weigh on Retail Brokers," he noted.