Here I am, presenting you with a bold prediction: shares of Robinhood Markets (HOOD 3.43%) will fall sharply in 2026. It might make you stop and think, but don't let it lead you to take any action -- because I could be wrong.
Every investor will make bad calls on occasion, after all. Even Warren Buffett has blundered, sometimes buying something he maybe shouldn't have bought, or selling when maybe he shouldn't have.
Image source: Getty Images.
But let's take a look at Robinhood Markets now -- because maybe it will drop in 2026.
Meet Robinhood Markets
Robinhood Markets is a "fintech" (financial technology) company that was early to offer free stock trading, offering investors the ability to buy fractions of shares and not requiring minimum sums to open accounts. It's not surprising, then, that it was successful in attracting younger and newer investors.
NASDAQ: HOOD
Key Data Points
It has been a great grower:
|
Time period |
Average annual return |
|---|---|
|
Past 1 years |
120.44% |
|
Past 3 years |
116.37% |
Source: Data from Morningstar.com as of Jan. 27, 2026.
And it's still growing. Its third quarter featured:
- Revenue up 100% year over year to $1.27 billion.
- Net income up 271% year over year to $556 million.
- Net interest revenue up 66% year over year (thanks mainly to interest-earning assets and activities such as margin loans).
- Total operating expenses up 31% year over year (which is a big jump, but far less than the jump in revenue, making it not an issue).
- Average revenue per user up 82% year over year (to $191).
Robinhood's performance has been pretty amazing, and the company has achieved it in part by adding more services available to its customers -- including, recently, betting on predictions.
Time to buy Robinhood Markets?
The main reason I'm taking a bearish stance on the company is its recent steep valuation. Its forward-looking price-to-earnings (P/E) ratio and its current P/E ratio were both recently around 44, which is a bit lofty. And its recent price-to-sales ratio of 23 is way above its five-year average of 7. (And even 7 is a rich price-to-sales figure.)
Go ahead and consider buying the stock -- or steering clear for now. It might jump by, say, 50% this year, or it might drop by, say, 50%. If you do buy, you might want to do so in increments, in case the stock drops in the near future. And do so only if you're planning to hang on to those shares for a long time -- in case the stock does dip and needs time to recover.
Meanwhile, know that there are many other compelling growth stocks out there.
