Robinhood Markets (HOOD 3.27%) has been a scorching-hot stock to own in recent years. Since 2022, the stock has risen by more than 500%, dwarfing the S&P 500 index and its returns of just 46% over the same time frame. The company has become a top option for retail investors to add to their portfolios, and with tremendous growth prospects, it's little wonder why.
However, with Robinhood's inflated valuation, some investors have been cashing out recently and thinking twice about the stock due to its high price. And in just the past three months, the stock has fallen by around 23%. It's now down 30% from its 52-week high of $153.86. Should you buy the dip?
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Robinhood has been growing at an impressive pace
What's special about Robinhood's business is the growth it has been achieving, which can make paying a high premium for the stock justifiable. In its most recent quarter (which ended on Sept. 30, 2025), the company doubled its sales, as its growth rate has been accelerating.
Not only has the company been achieving strong revenue growth, but its profits more than tripled in the most recent period, rising from $150 million to $556 million year over year.
HOOD Profit Margin (Quarterly) data by YCharts
With strong growth and improving margins, the business is on an encouraging path forward, particularly as it expands its prediction markets business and looks to draw in even more customers in the future. The big question is simply whether it's too highly valued right now.
NASDAQ: HOOD
Key Data Points
Is Robinhood's stock still too expensive?
Robinhoood's recent slide in value means the stock is now trading around the levels it was at back in September. However, investors are still paying a hefty premium for the stock, as its price-to-earnings (P/E) multiple is around 45. By comparison, the average stock on the S&P 500 trades at a P/E of just 27. And there are concerns that the S&P is already expensive as it is.
According to the consensus analyst price target of $136.62, there could be near-term upside of around 27% for investors who buy shares of Robinhood today. Analyst price targets can, however, change over time and by no means indicate that a stock is destined to get to those levels.
But with a strong business, improving margins, and a trading platform that is attracting many young customers, Robinhood is a stock that looks like it may very well be worth a high premium, given its promising growth prospects. If you're willing to buy and hold for the long term, this can be an excellent growth stock to buy on weakness right now.
