Why Is Robinhood Markets, Inc. (NASDAQ: HOOD) Stock Down 15% This Year?

What happened

Shares of Robinhood Markets, Inc. (NASDAQ: HOOD) fell 14.6% from the December 31, 2025 close through October 22, 2026. The decline sits beside a 24% increase in first-half revenue. The clearest business reasons for caution are weaker crypto revenue, a larger contribution from legally contested event contracts and continued exposure to trading activity and interest rates. No source can attribute every trade to those factors.

The year began from a high bar. Robinhood Markets, Inc. (NASDAQ: HOOD) had reported record 2025 revenue of $4.5 billion, up 52%, and net income of $1.9 billion. Yet fourth-quarter crypto revenue was already down 38% from a year earlier, showing that the fastest-growing parts of the platform could change quickly.

First-quarter revenue rose 15% to $1.067 billion and diluted earnings per share increased 3% to $0.38. Event-contract revenue reached $147 million while crypto revenue fell 47% to $134 million. Net deposits were $17.7 billion, platform assets reached $307 billion and Gold subscribers reached 4.3 million.

The second quarter was stronger. Revenue rose 32% to $1.308 billion and diluted earnings per share increased 48% to $0.62, although $0.14 of that figure came from gains primarily tied to the deconsolidation of Robinhood Ventures Fund I. Net deposits reached $21.7 billion, platform assets rose to $369 billion and Gold subscribers reached 4.8 million.

Read more: Robinhood Markets (HOOD) stock analysis and investment case

The move in numbers

The price calculation uses the same Class A common stock and U.S. dollars at both endpoints. One hundred multiplied by $96.58 divided by $113.10 minus one equals negative 14.6065%. Yahoo matched both raw closing prices within a fraction of a cent and reported no split or dividend event in the window.

For the six months ended June 30, net revenue rose by $459 million to $2.375 billion. Diluted earnings per share increased 26.6% to $1.00. The share decline and revenue growth moved in opposite directions by 38.6 percentage points. That gap is not a valuation model, but it shows that stronger reported growth did not settle the market's questions about its durability.

The binding change was inside transaction revenue. Event-contract revenue rose by $247 million, from $13 million to $260 million. That increase equaled 53.8% of the company's entire first-half net revenue increase. Event contracts rose from less than 1% to 10.9% of net revenue.

Crypto moved the other way. First-half crypto revenue fell 43% to $234 million and its share of net revenue dropped from 21.5% to 9.9%. Options, equities and event contracts more than offset the decline, but the mix replaced one volatile stream with another that carries a different legal risk.

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How the business works

Robinhood Markets, Inc. (NASDAQ: HOOD) earns transaction revenue by routing customer orders for options, crypto and equities, and by collecting commissions on event contracts and futures. It also earns net interest from margin loans, customer cash, securities lending and credit-card balances. Gold subscriptions and other services add a smaller recurring layer.

The model is broader than a trading app, but trading still matters. In 2025, transaction revenue supplied 59% of net revenue and net interest supplied 34%. In the first half of 2026, those shares were 59% and 31%. Other revenue reached 10%, helped by subscriptions and newer programs.

Margin lending is becoming more important. The margin book rose 27.7% during the second quarter to $21.641 billion, and margin-interest revenue rose 82% in the first half. August data showed the margin balance still near $21.5 billion, up 72% from a year earlier. That growth can deepen customer economics, but it also adds credit and market risk.

Fidelity Investments competes with a broader retirement, advisory and fund platform, while Kraken competes directly for active crypto customers. Robinhood Markets, Inc. (NASDAQ: HOOD) is trying to differentiate through one mobile account spanning stocks, options, crypto, retirement, credit, banking, advice and prediction markets. The company said 13 business lines had reached at least $100 million in annualized revenue by the second quarter.

Why the case is still difficult

The bull case is that customer assets and deposits keep compounding while more products earn revenue from the same account. August platform assets reached $383.7 billion, up 26% from a year earlier, and trailing-12-month net deposits were $74.1 billion. Equity volume rose 68% year over year and event-contract volume rose 15-fold.

The strongest counterargument is that the new growth engine is legally exposed. The second-quarter filing describes state enforcement actions, private lawsuits and tribal claims over sports-related event contracts. It warns that court decisions or policy changes could restrict categories of contracts or entire jurisdictions. A revenue stream that supplied more than half of first-half net growth therefore carries a direct regulatory test.

The rest of the mix has its own limits. Crypto revenue fell despite the Bitstamp acquisition. Lower short-term rates can pressure cash and sweep income. First-half provisions for credit losses rose 77% to $92 million, while operating expenses rose 26% to $1.390 billion. Rapid product expansion only creates value if fraud, credit, compliance and support costs remain controlled.

The balance sheet also deserves a clean read. Cash reached $5.4 billion at June 30, but that figure included proceeds from a $2.2 billion zero-coupon convertible-note offering due in 2029. The financing adds strategic flexibility and Robinhood Markets, Inc. (NASDAQ: HOOD) used capped calls and concurrent repurchases to address dilution, but the higher cash balance is not purely operating cash generation.

What's next

Robinhood Markets, Inc. (NASDAQ: HOOD) is scheduled to report third-quarter results on October 27. Watch total net revenue, event-contract revenue, crypto revenue, net deposits, margin balances, provisions for credit losses and the expense outlook. The cleanest test is whether customer and asset growth produce durable earnings without a larger dependence on contested products or one-time gains.

The 2026 operating evidence is stronger than the share decline alone suggests, but it does not prove the stock is cheap or identify why every trade occurred. The price calculation excludes dividend reinvestment. The next report must show that revenue diversification is reducing risk rather than moving it from crypto and rates into event-contract litigation, credit and execution.

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