Robinhood Markets delivered what should have been a victory lap—record annual revenue of $4.5 billion and soaring profits—but investors instead sent the stock tumbling double-digits after the trading platform's fourth-quarter results revealed deeper cracks in its cryptocurrency business. The mixed earnings report, released after markets closed on February 10, 2026, highlighted both the remarkable transformation of Robinhood's business model and the persistent volatility that continues to challenge the retail investing pioneer.
How Robinhood's Record Year Unfolded Amid Crypto Headwinds
For the full year 2025, Robinhood achieved what CEO Vlad Tenev called "a record year where we set new highs for net deposits, Gold Subscribers, trading volumes, revenues, and profits." The company reported diluted earnings per share of $2.05 for 2025, a significant improvement from $1.56 in 2024. Fourth-quarter revenue reached $1.28 billion, representing 27% year-over-year growth, while Q4 EPS came in at $0.66, beating analyst estimates of $0.60.
Beneath these headline numbers, however, a concerning trend emerged. Transaction-based revenue, which makes up the bulk of Robinhood's income, increased just 15% year-over-year to $776 million in Q4. This relatively modest growth was driven by a dramatic divergence within the business: cryptocurrency revenue plunged 38% to $221 million, while equities revenue jumped 54% to $94 million, options revenue climbed 41% to $314 million, and the new prediction markets segment exploded over 300% to $147 million.
Timeline: How the Earnings Reaction Developed Over 24 Hours
The market's response to Robinhood's earnings followed a predictable pattern of after-hours disappointment followed by extended selling pressure. Immediately following the 4:05 PM ET earnings release, HOOD shares dropped approximately 7% in after-hours trading as investors digested the revenue miss. By the time markets opened on February 11, the decline had accelerated, with shares falling as much as 12.5% by 10:30 AM ET according to Nasdaq analysis.
This reaction reflected what Reuters characterized as "disappointment on crypto slowdown" despite what the publication acknowledged were otherwise strong retail trading metrics. The sequence revealed how sensitive Robinhood's valuation remains to cryptocurrency performance, even as the company successfully diversifies into other revenue streams.
Why Prediction Markets May Be Robinhood's New Growth Engine
The standout performer in Robinhood's earnings report wasn't its traditional trading business but rather the prediction markets segment that barely existed a year ago. Generating approximately $110 million in Q4 revenue and roughly $300 million for all of 2025, prediction markets accounted for nearly 12 billion contracts traded. During the earnings call, CEO Vlad Tenev revealed this business had achieved a "$300 million-plus run rate" and represented Robinhood's fastest-growing revenue source.
"Prediction markets fit nicely into Robinhood's core demographic of younger, engaged users who enjoy speculating on event outcomes," noted Bloomberg in its coverage of the earnings. This strategic pivot comes at a crucial time as cryptocurrency volatility continues to pressure transaction revenues. The segment allows users to trade on outcomes ranging from sports events to election results, creating what analysts believe could become a billion-dollar business for Robinhood by 2027.
Where Things Stand Now: Robinhood's Current Position and Challenges
Despite the post-earnings stock decline, Robinhood's fundamental metrics show remarkable strength in user growth and engagement. The platform added 1.8 million funded customers in 2025, reaching 27 million total. More significantly, Robinhood Gold subscribers surged 58% year-over-year to 4.2 million, demonstrating increased monetization of its user base. Total platform assets reached $324 billion, up 68% from the previous year, while net deposits hit $68.1 billion for 2025.
However, the company faces ongoing challenges. The cryptocurrency market downturn that began in late 2025 shows few signs of immediate reversal, potentially continuing to pressure transaction revenues. Additionally, increased competition from traditional brokers who have eliminated commissions and improved their mobile offerings threatens Robinhood's market share. Regulatory scrutiny around prediction markets also represents a potential risk to the company's newest growth driver.
What Happens Next: The Road Ahead for Robinhood in 2026
Robinhood's leadership team outlined an ambitious 2026 roadmap during their earnings call, focusing on four key areas: prediction markets expansion, international growth, banking product development, and artificial intelligence integration. CFO Shiv Verma stated, "2026 is off to a strong start, and we are incredibly excited about our plan and momentum for the year ahead as we focus on shipping great products for customers and driving profitable growth for shareholders."
Analysts remain divided on Robinhood's near-term prospects. Some, like those at Bernstein, see substantial upside potential—as much as 87%—citing the prediction markets opportunity and temporary nature of crypto headwinds. Others caution that until Robinhood demonstrates it can sustainably grow revenues independent of cryptocurrency cycles, the stock may remain volatile. The company's share repurchase program, which bought back $100 million in Q4, suggests management believes the stock is undervalued at current levels.
The Bottom Line: Key Points for Investors to Remember
Robinhood's Q4 2025 earnings reveal a company at a strategic crossroads: record profitability and user growth contrasted with cryptocurrency dependence that continues to drive stock volatility. The rapid rise of prediction markets represents a promising diversification path, while traditional equity and options trading show resilient growth. For investors, the key takeaways are Robinhood's demonstrated ability to monetize its user base through Gold subscriptions, its strong deposit growth despite market conditions, and the significant opportunity—and risk—presented by its emerging prediction markets business. As the company continues its evolution from a commission-free trading disruptor to a diversified financial platform, its success will depend on executing its 2026 roadmap while navigating the unpredictable cryptocurrency landscape that first made it a household name.
