Is Robinhood's 11% Post-Earnings Fall a Buy-the-Dip Opportunity?
Shares of Robinhood Markets (NASDAQ: HOOD) just took their biggest hit in quite a while. On Nov. 6, shares closed down by nearly 11% as investors reacted to the firm’s Q3 2025 earnings. This was the stock’s largest single-day fall since Mar. 10, after regulators ordered the company to pay millions in fines and restitution.
Despite the finance company’s post-earnings fall, shares remain up well over 200% in 2025. So, where does Robinhood stand after this sell-off? Could there now be an opportunity in this high-flying name? Let’s break down the firm’s latest financials to explore this question.
Robinhood Doubles Revenue, But Devils Hide in the Details
In Q3, Robinhood delivered an astounding revenue growth rate of 100%. Sales boomed to $1.27 billion, considerably beating estimates of $1.15 billion, or 81% growth. This was the company’s second-fastest revenue growth rate in the last 12 quarters, only behind 115% in Q4 2024, which was driven by crypto trading after the election of President Trump.
The company’s diluted earnings per share (EPS) more than tripled to 61 cents, exceeding expectations. Adjusted earnings before interest, taxes, depreciation, and amortization margin (EBITDA) also impressed, increasing to 58% from 42% a year ago.
Transaction revenues stole the show, rising by 129%. Crypto was a giant driver of this, with revenues rising 300% from the previous year. Equity and options revenues were also strong, rising 132% and 50%, respectively.
Importantly, the company continues to extract more and more revenue from each of its users. Average revenue per user of $191 increased 82% versus Q3 2024.
However, beneath these headline numbers were a few red flags. First off, the company’s crypto revenue was actually lower than expected. Given that crypto is such a significant driver of the company’s growth engine, this disproportionately affected how the markets viewed the results.
Additionally, Robinhood’s diluted EPS beat was significantly inflated due to having a lower-than-expected effective tax rate. As it wasn't indicative of underlying outperformance, the EPS beat did not particularly impress investors. Furthermore, the company increased its expense outlook for 2025. These three factors were likely contributors to the stock’s fall. Crypto assets also fell on Nov. 6, exacerbating the drop in Robinhood.
Robinhood Continues to Invest And Expand Revenue Generation
On the positive side, Robinhood continues to show its ability to diversify away from reliance on crypto. The company now has 11 distinct business lines that are each generating $100 million or more in annual revenue.
Prediction markets are the latest addition to this. The company says that it has doubled prediction markets' volume every quarter since the 2024 election. Notably, Robinhood says it is increasing its 2025 expense guidance to invest in prediction markets and Robinhood Ventures, the tool that will allow users to invest in private companies. Clearly, prediction markets are already doing well, and it wouldn’t be surprising to see Ventures take off as well. Thus, it makes sense for Robinhood to invest in these areas to create a strong position.
Analysts Raise Targets on HOOD Despite 11% Drop
The MarketBeat consensus price target on Robinhood now stands at just over $132. This figure implies only around 4% upside potential. However, analysts who issued price target updates on Nov. 6 increased their targets by an average of 13%.
This came as shares fell 11%, a divergence that clearly indicates a potential opportunity in Robinhood shares.
Additionally, the average price target among these updated forecasts is $157.50.
This suggests that shares could rise by 24%, a vast improvement over the consensus target.
Despite this bullish signal, it is crucial to consider that the success of the stock market and crypto correlates with most of Robinhood’s revenue drivers.
A downturn in these assets would hit Robinhood shares particularly hard. Still, Robinhood is continuing to find new ways to grow, and its legacy revenue drivers are also expanding rapidly. Its long-term outlook remains strong, and with the stock down only 17% from its all-time high, a deeper correction could take place soon.
Learn more about HOOD
