I Predicted The 50% Plunge In Robinhood Stock. Here'…

Oleh Patinko • March 20, 2026

By Anthony Di Pizio – Mar 20, 2026 at 4:45AM EST

Key Points

Investors who use the Robinhood platform have a history of engaging in speculative, high-risk trading in cryptocurrencies and the options market.
This creates a very unstable revenue base for the company, which is partly why its stock has plummeted by 51% since last October.
Robinhood stock is still trading at an elevated valuation, which could open the door to further downside from here.

Crypto trading is an unreliable source of revenue growth

The majority of Robinhood’s revenue comes in the form of transaction fees, which it earns every time a client buys or sells a financial asset, whether it’s a stock, an options contract, or a cryptocurrency. Donald Trump’s presidential election win in November 2024 drove a tsunami of investment into the crypto markets, because he campaigned on a series of policies that stood to benefit the industry.

This contributed to a surge in Robinhood’s crypto transaction revenue, which rocketed 732% (year over year) higher during the fourth quarter of 2024, hitting a record high of $358 million. It represented more than half of the company’s total transaction revenue for the period. Something similar happened during the speculative crypto frenzy in 2021, which sent Robinhood’s crypto transaction revenue soaring by 4,560% during the second quarter of that year. But just one year later, as crypto markets tanked, it was down by 75%.

History appears to be repeating itself. In the fourth quarter of 2025, Robinhood’s crypto transaction revenue fell 38% compared to its peak in the fourth quarter of 2024, coming in at just $221 million. The company’s overall transaction revenue still climbed modestly due to a sharp gains in other areas of its business, options trading and prediction market betting, but these activities are also highly speculative.

Image source: Robinhood Markets.

The total value of all cryptocurrencies in circulation stands at $2.5 trillion as I write this, which is down sharply from the 2025 peak of $4.4 trillion. The Trump administration’s pro-crypto policies haven’t created much tangible value for the industry, and since most coins and tokens still lack a true use case, they have struggled to hang onto their post-election gains.

None of the major coins have escaped the carnage, not even Bitcoin or Ethereum, which are both down more than 40% from their all-time highs. These steep losses are ly to keep many investors on the sidelines, which could result in a further reduction in Robinhood’s crypto transaction revenue.

NASDAQ: HOOD

Robinhood Markets

Today’s Change

(-0.99%) $-0.74

Current Price

$74.16

Key Data Points

Market Cap

$67B

Day’s Range

$71.70 – $75.16

52wk Range

$29.66 – $153.86

Volume

19K

Avg Vol

28M

Gross Margin

94.96%

Robinhood’s valuation leaves room for further downside

Robinhood stock peaked at more than $150 last October. At the time, its price-to-sales (P/S) ratio had soared to more than 30, which was almost triple its average of about 11.5 since the stock went public in 2021. Therefore, its valuation was completely unsustainable.

Despite the 51% decline in the stock during the past few months, its P/S ratio is still at an elevated level of 15.3.

HOOD PS Ratio data by YCharts

That means Robinhood would have to decline by a further 25% just to trade in line with its long-term average P/S ratio of 11.5. I’m not suggesting that will happen for certain, but I will say a high valuation reduces the odds of a rally in the near future, especially with one of the company’s core revenue drivers — crypto trading — in decline.

On a more positive note, Robinhood’s entry into the prediction market sector (in partnership with Kalshi) has expanded the company’s reach, because it lets clients bet on the outcome of sports matches, elections, and more. Robinhood ended the fourth quarter of 2025 with $435 million in annualized revenue from its prediction business, which more than tripled from the third quarter just three months earlier.

The prediction business could help Robinhood attract more clients, which would be good news considering its monthly active user base declined last year. But there is one caveat: According to research by The Motley Fool, the overwhelming majority of sports bettors lose money over time, which isn’t ideal if Robinhood is trying to attract repeat customers.

In summary, I think further downside is the path of least resistance for Robinhood stock.

I Predicted The 50% Plunge In Robinhood Stock. Here'…

Key Points

Crypto trading is an unreliable source of revenue growth

NASDAQ: HOOD

Key Data Points

Robinhood’s valuation leaves room for further downside

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