Robinhood Q4 2025: Record Results, Stock Down 40% From Highs
$4.5B revenue, 52% growth, 56% margins, #1 in options — and the stock is down 40%+ from its late-2024 peak. Our committee changed one signal: EXPECTATIONS_PRICED moves from DEMANDING to MODEST.
This is an update to our full HOOD analysis and our prior regulatory cycle deep dive
The Numbers That Matter
+52% YoY, record
$2.5B adjusted EBITDA
Record, +76% YoY EBITDA
Since late-2024 high; P/S: 17.7x → ~9.9x
The Central Paradox
Robinhood just delivered the strongest year in its history. Revenue hit $4.5 billion, up 52% year-over-year. Adjusted EBITDA reached $2.5 billion at 56% margins — with incremental margins above 70% for the third consecutive year. The company became #1 in options industry-wide and recorded its eighth straight quarter of positive net transfers from every major brokerage competitor.
And the stock is down 40%+ from its peak.
This creates a rare analytical situation: the fundamentals strengthened while the price weakened. When we published our initial analysis just yesterday, we classified EXPECTATIONS_PRICED as DEMANDING at 17.7x trailing P/S. That assessment was correct for that price. At ~9.9x trailing P/S — below IBKR's ~13-15x despite delivering 2.5-3x the growth — the expectations picture has fundamentally changed.
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Updated Signal Scoreboard
40%+ stock decline compresses P/S from 17.7x to ~9.9x — below IBKR's ~13-15x despite 2.5-3x higher growth and 56% margins. Expectations achievable on demonstrated performance.
#1 in options industry-wide. 8 consecutive quarters of positive net transfers from ALL major competitors. Confidence upgraded, but bear market untested remains the gating factor for DEFENSIBLE.
Durable floor expanded from ~6% to ~8-9% (Gold 4.2M, banking launched, Gold Card scaling). Crypto at 18% (vs 21% estimate). Direction positive but gap to 25-30% DURABLE threshold remains.
FY 52% growth replaces 100% headline — 'Hyper-Growth' gap narrows to MODERATE. Super app narrative strengthened by banking, Cortex AI. Prediction market post-election durability demonstrated.
Regulatory-dependent revenue declined slightly to ~48-50% (from 52-57%). Rothera JV closed. Favorable environment confirmed as cyclical tailwind. New frontiers: AI advice, financial KPI prediction markets.
Why EXPECTATIONS_PRICED Changed
The original analysis classified expectations as DEMANDING because at 17.7x trailing P/S, the stock required favorable outcomes across approximately four independent risk dimensions for three or more years. That was correct for the price.
The 40%+ decline from its highs completely inverts the framework. Consider the peer comparison that drove the original DEMANDING assessment:
| Metric | HOOD (Current) | IBKR | Schwab |
|---|---|---|---|
| Trailing P/S | ~9.9x | ~13-15x | ~4x |
| Revenue Growth | 52% | ~15-20% | ~5-10% |
| EBITDA Margin | 56% | ~35-40% | ~35-40% |
| Forward P/S | ~7.5-8x | ~12-13x | ~3-4x |
At the previous 17.7x P/S, HOOD traded at a material premium to IBKR. At ~9.9x P/S, it trades at a 26-34% discount to IBKR — despite growing 2.5-3x faster with superior margins. On a forward basis, the discount widens further.
The previous minority position for STRETCHED (if growth decelerates) is now entirely obsolete. Even if HOOD's growth decelerated to IBKR-like levels (~15-20%), it would simply be trading at a discount to a comparable peer — not at a premium requiring perfection.
Competitive Position: Strengthening
#1 in Options Industry-Wide
From 606 regulatory reports. Not just "gaining share" — market leadership in one of the highest-revenue brokerage products. This is new E2-E3 evidence that directly addresses the prior CONTESTED classification.
8 Quarters Positive Net Transfers from ALL Competitors
Customers are literally voting with their assets — moving from Schwab, Fidelity, and every other major broker to Robinhood for eight consecutive quarters. Pattern-level E3 evidence against the "low switching costs make position fragile" argument.
Banking: >50% Direct Deposit Attach Rate
25,000+ funded banking customers with $400M+ in balances. Over half enrolled in direct deposit — the deepest form of financial relationship. Early, but this is the kind of engagement that transforms behavioral friction into structural switching costs.
Revenue Durability: The Floor Is Rising
The durable revenue thesis is progressing in the right direction, even if the destination remains distant.
New durable streams not captured in the original analysis — banking (25K customers, >50% direct deposit), Gold Card (600K customers, $10B spend, plan to double in 2026) — are expanding the floor. But at ~8-9% of a $4.5B base, the gap to the 25-30% threshold for a DURABLE upgrade remains significant. CONDITIONAL is confirmed.
What Remains Unresolved
Bear Market Untested
Every competitive gain, every market share win, and every record quarter occurred during one of the most favorable environments in financial markets history. The competitive position, the revenue model, and the customer retention have never been tested through a sustained downturn.
~48-50% Regulatory Dependency
Down from 52-57% (crypto at 18% not 21%), but still approximately half of revenue depends on specific regulatory treatment of PFOF, crypto, and prediction markets. The favorable political environment remains a cyclical tailwind, not a structural protection.
Customer Retention Unknown
Robinhood still does not disclose churn rates. The 8-quarter positive net transfer data is a useful proxy but not equivalent. This remains the most critical data gap for the competitive position assessment.
Updated Composite Assessment
The investor posture shifts from HIGHER_SCRUTINY to PROCEED_WITH_CAUTION.
The fundamental risks remain real: CONDITIONAL revenue, ELEVATED regulatory exposure, CONTESTED competitive position, and a DIVERGING (but narrowing) narrative-reality gap. These are genuine structural concerns, not hand-waving.
But the price paid for those risks has changed materially. At 17.7x P/S, the market demanded perfection. At ~9.9x P/S, the market is pricing meaningful risk — perhaps more risk than the operational results currently justify.
Whether the 40% decline from highs reflects macro cycle concerns (tariffs, crypto downturn) or information not yet visible in operating results is the key question. The earnings data shows no evidence of deterioration — quite the opposite. But markets are forward-looking, and the decline may be pricing in a future that Q4 results don't yet reflect.