I wrote articles in August 2025 and last month predicting a collapse in Robinhood Markets (HOOD 3.66%) stock of 50% or more. The stock peaked last October. But it was recently down by as much as 53%, with the downside accelerating in the early stages of this year.
I certainly don't have a crystal ball, but I did examine Robinhood's history very closely, and determined that its remarkable increase in value during 2025 was fueled by many of the unsustainable tailwinds that drove its 2021 rally: Highly speculative investing activity by its retail clients, particularly in the cryptocurrency markets.
Robinhood's investing platform is very popular with young, often first-time investors who trade very actively when the financial markets are strong, but who also have a tendency to retreat when gloom sets in. With that in mind, here's where I think Robinhood stock will go from here.
Image source: Getty Images.
Robinhood's crypto revenue is plummeting (again)
Robinhood's clients are very active in the stock, futures, options, cryptocurrency, and even prediction markets. The platform entered the prediction segment last year in partnership with Kalshi, expanding its reach into betting markets for sports and even politics. However, while this shift generated a lot of hype, Robinhood's prediction business was generating annualized revenue of $435 million as of Dec. 31, representing less than 10% of the company's total 2025 revenue of $4.47 billion.
Therefore, I want to focus on Robinhood's cryptocurrency business, which I believe is the main source of the recent plunge in its stock. First, let's rewind the clock back to 2021 -- during that year's second quarter, Robinhood's crypto transaction revenue soared by 4,560% year over year and accounted for more than half of the company's total transaction revenue, as investors piled into highly speculative tokens like Dogecoin and Shiba Inu, which were surging in value at the time.
When those rallies faded, so did client trading activity, which dented Robinhood's crypto business. In fact, by the 2022 second quarter, just one year later, the company's crypto transaction revenue was down by a whopping 75%. By that point, Robinhood stock had plummeted by more than 90%.
NASDAQ: HOOD
Key Data Points
Pivoting back to the present day, a similar trend seems to be underway. Robinhood's crypto transaction revenue soared to $358 million in the fourth quarter of 2024, and once again accounted for more than half of the company's total transaction revenue. Donald Trump's presidential election win triggered a fresh buying frenzy in the crypto markets, because he campaigned on a policy agenda that was expected to benefit the industry.
However, Robinhood's crypto transaction revenue was down 38% in the 2025 fourth quarter, coming in at just $221 million. Speculative tokens like Dogecoin and Shiba Inu plummeted last year, but as I write this, even top crypto coins like Bitcoin and Ethereum have lost between 45% and 60% of their peak value. Therefore, I think a repeat of 2022 might be on the table, so Robinhood's crypto struggles could get worse.
Image source: Robinhood Markets.
Robinhood stock is still expensive, which could lead to more downside
Despite the weakness in Robinhood's crypto business, its transaction revenue continues to climb thanks to elevated client trading activity in the stock and options markets. In fact, options trading is now the company's single largest source of transaction revenue -- but this hasn't always worked out so well in the past, because retail investors tend to stop buying risky financial derivatives when the stock market suffers a prolonged sell-off (as was the case in 2022).
That brings me to Robinhood's valuation. Its stock recently traded at a price-to-sales (P/S) ratio of 15.9, which is well above its average of 11.5 since the company went public in 2021.
HOOD PS Ratio data by YCharts
Robinhood's relatively high valuation doesn't make sense with its crypto transaction revenue collapsing, especially considering it's being offset by heightened options trading activity that's almost equally as risky for the platform's clients. Plus, Robinhood had an average of 13 million monthly active users during the fourth quarter of 2025, which was down 13% from the year-ago period, and also down sequentially. If this trend continues, it will almost certainly become a headwind for transaction revenue in the coming quarters.
As a result, I think Robinhood stock is poised for even more downside from here. It would have to decline by a further 27% just to trade in line with its long-term average P/S ratio of 11.5, so that might be a realistic near-term target.
