Last year, and again this year, I suggested that Robinhood Markets (HOOD 0.99%) stock would lose about half its value. It’s down 51%, give or take a few pennies. So it goes.
Robinhood, you see, lets people buy and sell stocks, options, crypto – the usual. The problem, as I saw it, wasn’t that they were evil, or incompetent. It was simply that a lot of their recent success depended on people betting on things they didn’t really understand. Crypto, mostly. A surge in speculative trading, and history tells us that rarely ends well.
Now that the stock has shed more than half its peak value, what’s next? Well, let’s not pretend we’re dealing with rocket science.
Crypto: A Fleeting Fancy
Most of Robinhood’s money comes from fees – little slices of each trade. When people buy and sell, Robinhood gets a cut. And recently, a very large slice of that cut came from crypto. Donald Trump’s election win, if you recall, gave the crypto markets a rather substantial jolt. Policies, promises, the usual. It was a bit like handing a loaded pistol to a chimpanzee, really.
That pushed Robinhood’s crypto revenue up 732% last quarter, hitting $358 million. More than half their total income. It reminded me of 2021, when crypto went briefly insane. Revenue jumped 4,560%. But then, as these things often do, it crashed. Down 75% in a year. So it goes.
Last quarter, crypto revenue fell 38%, to $221 million. Overall revenue climbed a bit, thanks to options trading and some betting on…well, everything. But that’s all just shuffling deck chairs on the Titanic, isn’t it? Highly speculative, all of it.
Total value of all cryptocurrencies? About $2.5 trillion. Used to be $4.4 trillion. Trump’s policies haven’t exactly conjured up any lasting value. Most of these coins and tokens don’t actually do anything, you see. It’s a bit like collecting bottle caps. They go up, they go down. So it goes.
Even Bitcoin and Ethereum are down more than 40% from their highs. People get scared. They stay on the sidelines. And that means less money for Robinhood. It’s a simple equation, really.
Valuation: Still a Bit Optimistic
Robinhood stock peaked at over $150 last October. The price-to-sales ratio soared to 30. Almost triple its average since it went public. Unsustainable, of course. Everything is unsustainable, eventually.
Even after the 51% drop, the P/S ratio is still 15.3. That means it would have to fall another 25% just to get back to its long-term average. I’m not saying it will happen, but it wouldn’t surprise me. A high valuation, combined with declining revenue, rarely ends well.
They’ve expanded into prediction markets – betting on sports, elections, the usual. Revenue from that is up – tripled in three months. Good for them. But The CORP-DEPO tells us most sports bettors lose money. So it goes. Attracting repeat customers might be a challenge.
In summary, I suspect the path of least resistance for Robinhood stock is…down. It’s not a prediction, really. Just an observation. A quiet acknowledgement of gravity. And gravity, my friends, always wins.
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2026-03-20 11:43