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Investors sold Robinhood Markets after its Q2 earnings release, despite the stock posting big beats. Wall Street doesn't seem to agree with the reaction; analysts raise their price targets. This creates a potential opportunity for investors, as the difference between actual prices and Wall Street forecasts widens positively.
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Although the vaunted S&P 500 Index recently snubbed Robinhood Markets (NASDAQ: HOOD), it remains one of the most impressive large-cap stocks of 2025. This comes despite the company's latest earnings release on July 30, after which shares traded down. |
However, there's an interesting twist. Wall Street analysts actually raised their price targets on Robinhood after the release. As shares move down and price targets move up, the implied upside Wall Street sees is growing. This sets up a potentially fruitful opportunity for investors going forward. |
Below, we'll examine the company's results to understand what transpired during the quarter. We'll also provide numbers on the divergence in share price and Wall Street forecasts to show how much upside analysts now see. |
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HOOD's Headline Numbers Smash Expectations |
In Q2, the financial services stock posted revenues of $989 million. This equated to a sales growth rate of 45%. The company beat analysts' estimates of $894 million and far exceeded expectations of just 31% growth. Robinhood's adjusted earnings per share (EPS) came in at 42 cents, beating forecasts by 12 cents. Adjusted EPS increased by 100% compared to the 43% growth analysts penciled in. |
The company's transaction-based revenues are its most important source of sales, accounting for 55% of total revenue last quarter. Year-over-year (YOY) transaction revenue growth was strong at 65%. Breaking this down further, revenues from trading crypto, options, and stocks increased 98%, 45%, and 65%, respectively. |
Despite posting these substantial numbers, shares declined by nearly 3% on July 31. There are a few possible reasons for this. |
Squaring Big Beats With a Sell-Off: Crypto and Valuation Are Likely to Blame |
Although crypto trading revenues spiked on a YOY basis, they have fallen significantly from their Q4 2024 peak of $358 million. The $160 million worth of Q2 2025 crypto revenues is down 55% from that peak, and fell 37% versus Q1 2025. This demonstrates the highly volatile nature of one of the company's most key sources of revenue, which may be giving investors pause. |
Another likely reason for the sell-off is the stock's incredibly strong run in 2025. Robinhood is the second-best performing stock in the Russell 1000 Index this year, with a return of 185% coming into the release. |
The Russell 1000 represents the 1,000 most valuable U.S. stocks, offering a more comprehensive view of the market than the S&P 500. Only MP Materials (NYSE: MP) had a better return among Russell 1000 stocks through July 30 at 290%. |
High returns come with high expectations; often, any sign of weakness can result in a decline in shares. That seems to be what happened to Robinhood, as crypto trading was somewhat soft. |
Before the release, Robinhood traded at a forward price-to-earnings (P/E) ratio of nearly 67x. That was around 91% higher than its average forward P/E of 35x over the last 12 months, creating elevated downside risk after earnings. Still, Robinhood's results were undeniably strong overall. |
That's likely why Wall Street analysts lifted their price targets. |
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Updated Price Targets Indicate 15% Upside Potential in HOOD Shares |
MarketBeat tracked several Wall Street analysts that updated their Robinhood price targets on July 31, one day after the earnings release. Notably, the average price target among these analyst rose from $99 to just under $119, a 20% boost. |
That contrasts with the nearly 3% drop in shares. Thus, Wall Street's upside potential widened through two levers: rising targets and falling shares. This combination sets up a more favorable upside profile for investors going forward. |
The MarketBeat consensus price target on Robinhood is just over $94 per share. This figure implies around 9% downside potential, compared to the stock's July 31 closing price. However, as stated above, the average price target among analysts who issued July 31 updates is just under $119. |
This figure flips the script, implying substantial upside potential in the stock to 15%. This is significant for investors, as these latest targets incorporate the most recent information on Robinhood. Thus, their predictive value should surpass that of targets that analysts have not updated since the earnings release. |
Robinhood's business is clearly on the rise. Although showing some crypto weakness due to difficult comparisons, the overall trend is positive. The firm's results continue to impress, making this a hard stock to bet against. The divergence in price action and Wall Street targets adds more juice to the stock's bullish case going forward. |
Written by Leo Miller |
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