Down 40%, Is Robinhood Stock a Buy on the Latest Dip?

Robinhood Markets (HOOD) stock has experienced a significant 40% drop since its all-time high. Despite this decline, the company's latest financial results and future prospects suggest that the dip could present a buying opportunity. The company's fourth consecutive quarter saw a steep decline in cryptocurrency revenue, which was a major growth driver for the business.

The Q3 crypto revenue fell by 55% to $120 million, making up a smaller share of overall revenue. The company remains committed to growing its crypto business, having recently acquired Canadian crypto exchanges Bitbuy and Coinsquare. In terms of overall performance, transaction revenue increased by 19% to $867 million, with event-contract revenue up sixfold to $173 million and options revenue rising 31% to $399 million.

However, net interest revenue declined by 9% to $415 million. Net deposits grew at a 17% annualized rate relative to total platform assets, which jumped by 19% to $396 billion. The company's adjusted EPS fell 3% to $0.60, but this was higher than the analyst consensus of $0.56. Looking ahead, Robinhood's Q4 started strong, with October deposits surpassing $13 billion, including $6 billion from Dell Foundation contributions.

The company sees potential in its prediction market offering, Gold accounts, and credit cards. While high bid-ask spreads and take rates continue to impact crypto trading revenue, the company is optimistic about future growth in 2027, with a forward P/E ratio of around 26.5.