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Buy, Sell, or Hold Robinhood Stock? Key Tips Ahead of Q3 Earnings
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Key Takeaways
Robinhood to report Q3 results Nov. 5 after a strong first-half marked by 47% top-line growth.
Q3 revenue is expected to surge 90.6% year over year, led by gains in trading and net interest income.
Despite expansion plans and crypto growth, HOOD's premium valuation and regulatory risks spur caution.
Robinhood Markets (HOOD - Free Report) is set to announce third-quarter 2025 results on Nov. 5 after market close.
Robinhood’s first-half 2025 performance was impressive. Results benefited substantially from higher trading activity across all asset classes amid heightened volatility. Also, higher net interest revenues, a surge in Gold subscribers and an improvement in Monthly Active Users (MAU) were tailwinds. This largely supported the top line, which soared 47% year over year.
HOOD is expected to have witnessed solid revenue growth in the third quarter as well. The Zacks Consensus Estimate for quarterly sales of $1.21 billion suggests a 90.6% surge on a year-over-year basis.
Further, Robinhood has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and lagged once, with the average beat being 19.46%.
Earnings Surprise
Image Source: Zacks Investment Research
In the past week, the consensus estimate for earnings has remained unchanged at 51 cents. This indicates a jump of 200% from the prior-year quarter.
HOOD’s Earnings Estimates
Image Source: Zacks Investment Research
Is now the correct time to add HOOD stock to your portfolio just before its earnings release, or should you wait? Let’s see how things are shaping up before this announcement.
Factors to Note & Estimates for HOOD’s Q3 Results
Revenues: During the third quarter, client activity was robust, driven by heightened volatility amid clarity on several macro issues. Hence, Robinhood’s transaction revenues are expected to have increased like its peers, Interactive Brokers (IBKR - Free Report) and Charles Schwab (SCHW - Free Report) .
Interactive Brokers, which released third-quarter results on Oct. 16, witnessed a 23.4% year-over-year jump in commissions. Further, Schwab, which also announced quarterly numbers on Oct. 16, recorded 24.8% growth in trading revenues.
The Zacks Consensus Estimate for HOOD’s transaction-based revenues is pegged at $756.4 million, indicating a 137.1% jump from the prior-year quarter. This is likely to have been driven by higher options, equity and cryptocurrencies transaction revenues.
The consensus estimate for options transaction revenues is $300.2 million, suggesting 48.6% growth. Further, the Zacks Consensus Estimate for equity and cryptocurrencies transaction revenues is pegged at $82.5 million and $313.9 million, respectively. Equity transaction revenues are projected to surge 122.9%, while cryptocurrencies transaction revenues are estimated to jump 414.6% year over year.
Further, relatively higher interest rates are expected to have supported Robinhood’s NII in the to-be-reported quarter, despite a 25-basis point cut in interest rates by the Federal Reserve. The consensus estimate for NII is $384.7 million, implying a 40.4% rise.
The Zacks Consensus Estimate for other revenues is pegged at $68.7 million, suggesting a 56.2% increase from the prior-year quarter.
Expenses: Total operating expenses are likely to have remained elevated as the company invests in key areas to enhance platform capabilities, drive product innovation, improve customer support and build upon regulatory and compliance functions. Also, the pending acquisition of WonderFi Technologies is likely to have incurred some restructuring/merger-related charges during the third quarter.
What Our Model Unveils for Robinhood Stock
Our quantitative model shows that the chances of an earnings beat for Robinhood are low this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you see below.
Earnings ESP: Robinhood has an Earnings ESP of -3.26%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Robinhood’s shares have had a remarkable run on the bourses since the beginning of the year, with the stock soaring a whopping 294%. It has outperformed the industry’s growth of 31.2%. Also, it fared better than Schwab and Interactive Brokers.
HOOD’s YTD 2025 Price Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Robinhood offers investors at current levels.
Currently, HOOD is trading at 17.8X 12-month trailing price/tangible book (P/TB), above the industry’s P/TB TTM multiple is 3.21X. Hence, the stock is trading at a steep premium compared with the industry.
HOOD P/TB TTM
Image Source: Zacks Investment Research
Investment Thesis for Robinhood
Robinhood is on the right path to expand and diversify its operations. Given the volatility in the stock markets due to several macroeconomic challenges, the company is expected to benefit from rising trading volume. However, tariff-related headwinds may hurt its financials to some extent.
Nonetheless, HOOD’s initiatives to keep adding new products and services and its plans to become a global entity by venturing across the European Union (EU) and the Asia Pacific regions, organically and through buyouts, align with its expansion efforts. Robinhood’s plans to focus on the cryptocurrency space through increased tokenization, enhanced capabilities and expansion into the EU markets will diversify its business.
Its growing international footprint has been bolstered by tapping into high-growth crypto and fintech markets. Robinhood’s evolving product suite caters to a younger, tech-savvy investor base, while its declining reliance on transaction-based revenue reflects increasing business maturity. Solid liquidity, a $1.5 billion buyback program and robust user growth amid rising digital asset adoption further reinforce investor confidence. In September, the company joined the S&P 500 Index.
Nevertheless, Robinhood faces mounting regulatory scrutiny, fines and investigations across jurisdictions, raising compliance risks and potentially hindering its growth and expansion efforts. Further, its foray into the banking industry amid intense competition keeps investors cautious about its success.
How to Approach HOOD Stock Ahead of Q3 Earnings?
Robinhood’s strategic acquisitions and ongoing product diversification efforts position it well for strong third-quarter results. Heightened market volatility is likely to have supported top-line growth. Yet, investor caution persists amid tariff uncertainties, rising regulatory scrutiny and stiff competition in newly entered sectors like banking.
While Robinhood presents a compelling investment case, supported by a rapid evolution into a diversified global financial services platform, expanding beyond retail brokerage into wealth management, advisory and consumer finance, its premium valuation makes us apprehensive.
With third-quarter results on the horizon, it will be wise to wait before making any investment decision.
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Buy, Sell, or Hold Robinhood Stock? Key Tips Ahead of Q3 Earnings
Key Takeaways
Robinhood Markets (HOOD - Free Report) is set to announce third-quarter 2025 results on Nov. 5 after market close.
Robinhood’s first-half 2025 performance was impressive. Results benefited substantially from higher trading activity across all asset classes amid heightened volatility. Also, higher net interest revenues, a surge in Gold subscribers and an improvement in Monthly Active Users (MAU) were tailwinds. This largely supported the top line, which soared 47% year over year.
HOOD is expected to have witnessed solid revenue growth in the third quarter as well. The Zacks Consensus Estimate for quarterly sales of $1.21 billion suggests a 90.6% surge on a year-over-year basis.
Further, Robinhood has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and lagged once, with the average beat being 19.46%.
Earnings Surprise
Image Source: Zacks Investment Research
In the past week, the consensus estimate for earnings has remained unchanged at 51 cents. This indicates a jump of 200% from the prior-year quarter.
HOOD’s Earnings Estimates
Image Source: Zacks Investment Research
Is now the correct time to add HOOD stock to your portfolio just before its earnings release, or should you wait? Let’s see how things are shaping up before this announcement.
Factors to Note & Estimates for HOOD’s Q3 Results
Revenues: During the third quarter, client activity was robust, driven by heightened volatility amid clarity on several macro issues. Hence, Robinhood’s transaction revenues are expected to have increased like its peers, Interactive Brokers (IBKR - Free Report) and Charles Schwab (SCHW - Free Report) .
Interactive Brokers, which released third-quarter results on Oct. 16, witnessed a 23.4% year-over-year jump in commissions. Further, Schwab, which also announced quarterly numbers on Oct. 16, recorded 24.8% growth in trading revenues.
The Zacks Consensus Estimate for HOOD’s transaction-based revenues is pegged at $756.4 million, indicating a 137.1% jump from the prior-year quarter. This is likely to have been driven by higher options, equity and cryptocurrencies transaction revenues.
The consensus estimate for options transaction revenues is $300.2 million, suggesting 48.6% growth. Further, the Zacks Consensus Estimate for equity and cryptocurrencies transaction revenues is pegged at $82.5 million and $313.9 million, respectively. Equity transaction revenues are projected to surge 122.9%, while cryptocurrencies transaction revenues are estimated to jump 414.6% year over year.
Further, relatively higher interest rates are expected to have supported Robinhood’s NII in the to-be-reported quarter, despite a 25-basis point cut in interest rates by the Federal Reserve. The consensus estimate for NII is $384.7 million, implying a 40.4% rise.
The Zacks Consensus Estimate for other revenues is pegged at $68.7 million, suggesting a 56.2% increase from the prior-year quarter.
Expenses: Total operating expenses are likely to have remained elevated as the company invests in key areas to enhance platform capabilities, drive product innovation, improve customer support and build upon regulatory and compliance functions. Also, the pending acquisition of WonderFi Technologies is likely to have incurred some restructuring/merger-related charges during the third quarter.
What Our Model Unveils for Robinhood Stock
Our quantitative model shows that the chances of an earnings beat for Robinhood are low this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you see below.
Earnings ESP: Robinhood has an Earnings ESP of -3.26%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: It carries a Zacks Rank #3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HOOD Stock Price Performance & Valuation
Robinhood’s shares have had a remarkable run on the bourses since the beginning of the year, with the stock soaring a whopping 294%. It has outperformed the industry’s growth of 31.2%. Also, it fared better than Schwab and Interactive Brokers.
HOOD’s YTD 2025 Price Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Robinhood offers investors at current levels.
Currently, HOOD is trading at 17.8X 12-month trailing price/tangible book (P/TB), above the industry’s P/TB TTM multiple is 3.21X. Hence, the stock is trading at a steep premium compared with the industry.
HOOD P/TB TTM
Image Source: Zacks Investment Research
Investment Thesis for Robinhood
Robinhood is on the right path to expand and diversify its operations. Given the volatility in the stock markets due to several macroeconomic challenges, the company is expected to benefit from rising trading volume. However, tariff-related headwinds may hurt its financials to some extent.
Nonetheless, HOOD’s initiatives to keep adding new products and services and its plans to become a global entity by venturing across the European Union (EU) and the Asia Pacific regions, organically and through buyouts, align with its expansion efforts. Robinhood’s plans to focus on the cryptocurrency space through increased tokenization, enhanced capabilities and expansion into the EU markets will diversify its business.
Its growing international footprint has been bolstered by tapping into high-growth crypto and fintech markets. Robinhood’s evolving product suite caters to a younger, tech-savvy investor base, while its declining reliance on transaction-based revenue reflects increasing business maturity. Solid liquidity, a $1.5 billion buyback program and robust user growth amid rising digital asset adoption further reinforce investor confidence. In September, the company joined the S&P 500 Index.
Nevertheless, Robinhood faces mounting regulatory scrutiny, fines and investigations across jurisdictions, raising compliance risks and potentially hindering its growth and expansion efforts. Further, its foray into the banking industry amid intense competition keeps investors cautious about its success.
How to Approach HOOD Stock Ahead of Q3 Earnings?
Robinhood’s strategic acquisitions and ongoing product diversification efforts position it well for strong third-quarter results. Heightened market volatility is likely to have supported top-line growth. Yet, investor caution persists amid tariff uncertainties, rising regulatory scrutiny and stiff competition in newly entered sectors like banking.
While Robinhood presents a compelling investment case, supported by a rapid evolution into a diversified global financial services platform, expanding beyond retail brokerage into wealth management, advisory and consumer finance, its premium valuation makes us apprehensive.
With third-quarter results on the horizon, it will be wise to wait before making any investment decision.