Why Robinhood Stock Lost 12% in December

Shares of Robinhood Markets (NASDAQ: HOOD) stock dropped 12% in December, according to data provided by S&P Global Market Intelligence. Robinhood is highly exposed to cryptocurrency, and falling cryptocurrency prices likely impacted Robinhood as well.

Why Robinhood stock has been soaring

Robinhood is known for its stock trading platform, which has developed a loyal following; however, it's expanding into a full financial services platform with a wide assortment of products. While some of those lean risky, such as options and cryptocurrency trading, others, like credit cards, are of the more traditional sort.

Users appreciate the access to many different investment vehicles that aren't available on many trading apps, and the platform is attracting new customers. It's also growing rapidly, and it has become highly profitable.

Image source: Getty Images.

The third quarter was an excellent example. Revenue doubled year over year, while net income increased 271% to $556 million. Robinhood added 2.8 million new investing accounts for a total of 27.9 million, and its Gold membership, which costs $50 annually, is growing even faster; it added 1.7 million customers in the quarter for a total of 3.9 million, 77% more than last year.

Management is rolling out new products at a rapid pace. This leads to a positive cycle of attracting more customers, creating new revenue streams, and ensuring a long growth runway with increased opportunities for engagement. One notable recent product rollout was Prediction Markets, which is an entirely new segment. It's also reaching new markets and expanding the availability of products in existing markets, including adding 200 new tokens in the European market in the third quarter.

Can it continue into 2026?

Despite what it might look like considering its fall in December, Robinhood had a fantastic 2025, and its stock ended the year up 204%.

Its recent drop is connected to volatility in cryptocurrencies like Bitcoin, which has dropped 24% over the past three months. Although the investing community in general is optimistic about Robinhood's cryptocurrency prospects, the flip side is that the company is highly impacted by cryptocurrency movements. Cryptocurrency trading accounted for more than a third of total transaction revenue in the third quarter and about a fifth of total revenue. How it performs in 2026 may be strongly connected to what happens with cryptocurrency.

Risk-tolerant investors may view the stock drop as an opportunity to buy shares on the dip, but there may be more coming before the stock starts climbing again.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.