Bernstein says weakness priced in as Robinhood stock sinks on Q1 earnings

Robinhood Markets (NASDAQ: HOOD) traded in the “red” on Wednesday after reporting its fiscal Q1 earnings that failed to meet Wall Street expectations.

The retail trading platform saw revenue come in at $1.067 billion – representing a 15% year-over-year increase.

Per-share earnings also popped a penny to $0.38 in the first quarter.

Yet, the headline numbers tell a story of deceleration, considering HOOD’s topline grew an exciting 50% in the same quarter last year.

A major culprit in Q1 was crypto: fees from digital asset trades crashed about 47% year-over-year, dragged down by a broader slump across the cryptocurrency space – renewing concerns about the company’s ability to sustain the explosive growth it posted just a year ago.

But Bernstein is urging investors not to panic. Its senior analyst Gautam Chhugani maintained his “outperform” rating on Robinhood stock with a $130 price target, indicating more than 80% upside from here.

The firm’s core argument: Q1 weakness and near-term headwinds are already priced into HOOD, which is down over 38% in the year so far.

The post-earnings dip, therefore, is more an opportunity than a warning for long-term investors, it added.

Why Bernstein recommends buying Robinhood stock

According to Gautam Chhugani, beneath the disappointing headline numbers, a bunch of operating indicators is quietly telling a different story that actually warrants buying HOOD stock on the Q1 dip.

These include Robinhood’s “prediction markets” business that executives have previously dubbed the driver of future explosive growth.

That segment delivered a standout quarter – event contracts generated a record 8.8 billion units in the first quarter, helping other transaction revenue more than quadruple to $147 million.

Meanwhile, HOOD’s margin book hit a record $17.0 billion, up 93% from the prior year, signaling that wealthier, more active customers are deepening their engagement with the platform.

Gold subscribers reached a record 4.3 million in Q1, up roughly 36%%, with a 16% customer base attach rate and a 40% attach rate for new customers.

In its research note, Bernstein also highlighted that April trading data looks significantly stronger, with equity and options volumes tracking toward the best month of the year and prediction market pacing toward roughly $3 billion in contracts – signaling Q1 softness may be a trough, not a trend.

What else could drive HOOD shares higher in 2026

Looking further ahead, Bernstein sees two catalysts that could meaningfully expand Robinhood’s revenue base and reduce its reliance on third-party infrastructure.

First is the planned mid-2026 launch of Rothera, Robinhood’s joint venture exchange with trading powerhouse Susquehanna.

The new venue is designed to give HOOD greater control over pricing and product selection for event contracts, reducing dependence on platforms like Kalshi and potentially improving margins in its fastest-growing business line.

Second is the company’s role as the sole initial trustee for Trump Accounts, a government-backed savings initiative for children run in partnership with BNY.

About 5.5 million children have already signed up from an eligible pool of 60 million – a massive runway for future funded account growth.

Robinhood plans to invest $100 million to build out this vertical, and has adjusted its 2026 operating expense guidance to $2.7 billion at least to account for the spend.

Together, these major catalysts could drive Robinhood shares much higher, Chhugani told clients.

How to play Robinhood Markets after Q1 earnings

At roughly $82 per share, HOOD shares trade at a steep discount to where it was just six months ago – and Bernstein believes the market is underpricing the platform’s long-term earnings power.

Total platform assets have grown 39% year-over-year to $307 billion on the back of continued net deposits.

Internationally, Robinhood Markets is approaching 1 million funded clients, with a crypto launch in Canada, in-principle regulatory approval in Singapore, and its Bitstamp institutional unit gaining share.

In short, with prediction markets scaling rapidly, crypto stabilizing in April, a proprietary exchange on the horizon, and tens of millions of potential Trump Account customers yet to be converted, HOOD’s long-term growth story appears very much intact, Bernstein concluded.

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