I Predicted the 50% Plunge in Robinhood Stock. Here’s What Could Happen Next.

I wrote articles in August 2025 and final month predicting a collapse in Robinhood Markets (HOOD +6.82%) inventory of fifty% or extra. The inventory peaked last October. Nevertheless it was not too long ago down by as a lot as 53%, with the draw back accelerating in the early stages of this year.

I definitely haven’t got a crystal ball, however I did study Robinhood’s historical past very carefully, and decided that its exceptional enhance in worth throughout 2025 was fueled by a lot of the unsustainable tailwinds that drove its 2021 rally: Extremely speculative investing exercise by its retail shoppers, significantly in the cryptocurrency markets.

Robinhood’s investing platform could be very in style with younger, typically first-time buyers who commerce very actively when the monetary markets are robust, however who additionally tend to retreat when gloom units in. With that in thoughts, here is the place I suppose Robinhood inventory will go from right here.

Picture supply: Getty Pictures.

Robinhood’s crypto income is plummeting (once more)

Robinhood’s shoppers are very lively in the inventory, futures, choices, cryptocurrency, and even prediction markets. The platform entered the prediction section final 12 months in partnership with Kalshi, increasing its attain into betting markets for sports activities and even politics. Nevertheless, whereas this shift generated a whole lot of hype, Robinhood’s prediction enterprise was producing annualized income of $435 million as of Dec. 31, representing lower than 10% of the firm’s whole 2025 income of $4.47 billion.

Due to this fact, I wish to concentrate on Robinhood’s cryptocurrency enterprise, which I consider is the primary supply of the latest plunge in its inventory. First, let’s rewind the clock again to 2021 — throughout that 12 months’s second quarter, Robinhood’s crypto transaction income soared by 4,560% 12 months over 12 months and accounted for greater than half of the firm’s whole transaction income, as buyers piled into extremely speculative tokens like Dogecoin and Shiba Inu, which had been surging in worth at the time.

When these rallies light, so did shopper buying and selling exercise, which dented Robinhood’s crypto enterprise. In truth, by the 2022 second quarter, only one 12 months later, the firm’s crypto transaction income was down by a whopping 75%. By that time, Robinhood inventory had plummeted by greater than 90%.

In the present day’s Change

(6.82%) $4.85

Present Worth

$75.97

Key Knowledge Factors

Market Cap

$68B

Day’s Vary

$71.52 – $77.08

52wk Vary

$29.66 – $153.86

Quantity

44M

Avg Vol

29M

Gross Margin

89.70%

Pivoting again to the current day, an identical development appears to be underway. Robinhood’s crypto transaction income soared to $358 million in the fourth quarter of 2024, and as soon as once more accounted for greater than half of the firm’s whole transaction income. Donald Trump’s presidential election win triggered a recent shopping for frenzy in the crypto markets, as a result of he campaigned on a coverage agenda that was anticipated to profit the trade.

Nevertheless, Robinhood’s crypto transaction income was down 38% in the 2025 fourth quarter, coming in at simply $221 million. Speculative tokens like Dogecoin and Shiba Inu plummeted final 12 months, however as I write this, even prime crypto cash like Bitcoin and Ethereum have misplaced between 45% and 60% of their peak worth. Due to this fact, I suppose a repeat of 2022 may be on the desk, so Robinhood’s crypto struggles might worsen.

Picture supply: Robinhood Markets.

Robinhood inventory continues to be costly, which might result in extra draw back

Regardless of the weak spot in Robinhood’s crypto enterprise, its transaction income continues to climb due to elevated shopper buying and selling exercise in the inventory and choices markets. In truth, choices buying and selling is now the firm’s single largest supply of transaction income — however this hasn’t all the time labored out so nicely in the previous, as a result of retail buyers are likely to cease shopping for dangerous monetary derivatives when the stock market suffers a prolonged sell-off (as was the case in 2022).

That brings me to Robinhood’s valuation. Its inventory not too long ago traded at a price-to-sales (P/S) ratio of 15.9, which is nicely above its common of 11.5 since the firm went public in 2021.

HOOD PS Ratio knowledge by YCharts

Robinhood’s comparatively excessive valuation does not make sense with its crypto transaction income collapsing, particularly contemplating it is being offset by heightened choices buying and selling exercise that is virtually equally as dangerous for the platform’s shoppers. Plus, Robinhood had a mean of 13 million month-to-month lively customers throughout the fourth quarter of 2025, which was down 13% from the year-ago interval, and likewise down sequentially. If this development continues, it would virtually definitely grow to be a headwind for transaction income in the coming quarters.

Because of this, I suppose Robinhood inventory is poised for much more draw back from right here. It must decline by an extra 27% simply to commerce in line with its long-term common P/S ratio of 11.5, in order that may be a sensible near-term goal.