Robinhood’s Q4 Crypto Dip Overshadows Strategic Growth: Bernstein Projects 105% Upside

Following its latest earnings report, online brokerage giant Robinhood (NASDAQ: HOOD) saw its stock price briefly falter, largely due to a notable 38% year-over-year decline in Q4 cryptocurrency revenue. However, leading research and brokerage firm Bernstein views this market reaction as an overblown response to “transient crypto market jitters,” reaffirming a robust $160 target price. This projection suggests a potential upside of approximately 105% from Wednesday’s closing price, presenting a compelling bullish outlook for the platform.

Robinhood shares closed at $78 on Wednesday, having recovered from an intraday low of $74.25, though the stock remains down approximately 32% year-to-date.

Divergent Revenue Streams Tell a Broader Story

The market’s initial apprehension stemmed from a clear divergence in Robinhood’s Q4 revenue structure. While overall net revenue surged an impressive 27% year-over-year to a record $1.28 billion, propelled by strong growth in options and stock trading, cryptocurrency transaction revenue presented a stark contrast, plummeting 38% to $221 million.

This dip in crypto revenue is closely tied to a 52% year-over-year reduction in core app trading volume. Far from a red flag, Bernstein interprets this as a strategic pivot. The platform is actively reducing its reliance on the often-volatile, short-term trading enthusiasm of retail investors, instead diversifying its income streams through subscriptions (such as Gold membership) and interest income.

Bernstein’s Unwavering Bullish Stance

In a client report issued on Wednesday, the Bernstein analysis team, led by Gautam Chhugani, underscored that the anticipated slowdown in cryptocurrency trading activity and its impact on revenue was “expected.” They argue that Robinhood’s stock price is nearing its floor, making a bearish turn at this juncture unwarranted.

Bernstein highlights Robinhood’s robust core operational metrics, which continue to impress despite the broader crypto market volatility. Key indicators reaching new highs include a surge in funded accounts, an increasing number of Gold subscription members, and growth in Gold credit card users. Furthermore, the company’s retirement assets have doubled, now standing at a substantial $26.5 billion.

Adding to the positive outlook, Robinhood Banking, slated for a late 2025 launch, has already garnered significant traction, attracting over 25,000 funded customers and accumulating deposit balances exceeding $400 million.

New Horizons: Prediction Markets and Blockchain Innovation

Analysts also pointed to Robinhood’s burgeoning prediction market business as a significant “new cash cow.” This segment now accounts for approximately 14% of trading revenue and 8% of total revenue. Q4 alone saw 8.5 billion contracts traded, far surpassing initial market expectations. Year-to-date in 2026, trading volume has already reached 4 billion contracts, firmly on track to achieve the ambitious full-year target of $27 billion.

A major catalyst for this segment is the planned mid-2026 launch of “Rothera,” a prediction market joint venture with quantitative trading powerhouse Susquehanna. This collaboration is poised to be a pivotal driver in Robinhood’s expansion into a broader ecosystem of information and capital markets.

Looking ahead, Robinhood is strategically focusing on family wealth management, private markets, and asset tokenization. The company recently unveiled the public testnet for its Ethereum Layer2 network, Robinhood Chain. This initiative will facilitate experiments with tokenized assets, with the mainnet launch anticipated later this year, signaling a bold step into the future of decentralized finance.

Investment Outlook: A Prime Accumulation Zone

Bernstein maintains its “Outperform” rating on Robinhood, reiterating its $160 price target, which implies an impressive 105% potential upside from Wednesday’s closing price. Analysts strongly recommend the “$60 to $75” range as an “excellent accumulation zone,” advising investors to consider building positions during this period.