Robinhood Stock Outlook: Is HOOD Stock a Buy after Its Rally and Recent Pullback?

TradingKey - After nearly tripling over the past year, Robinhood is once again a magnet for growth investors. The online brokerage has capitalized on a rising market, a resurgence in retail trading, and a dramatic improvement in profitability.

However, a short-lived but sharp retreat in the share price has led to renewed questions: Is the rally overdone? With HOOD stock approaching its next earnings season amidst high expectations, investors must now consider if the current price offers an attractive entry point or if the short-term risks are becoming too heavy to ignore.

The business behind the rally

Robinhood rose to the top of the brokerage ranks in large part because it disrupted the traditional model of charging commissions on trades and offered a mobile-first, user experience that was easy for newcomers to understand. The company derives revenues in this ecosystem via multiple channels, including payment for order flow, crypto trading spreads and rebates, net interest income from uninvested cash and margin lending, and subscription revenue from a premium Gold tier. These sources of income enable the platform to keep trading free, while profiting from activity and balances across the system.

The company’s trajectory of growth has been anything but straight. A boom in retail trading in 2020 and 2021 encouraged by stimulus checks, social media enthusiasm, and speculative heat was followed by a sharp slowdown in 2022 as rising rates incentivized investors to move into safer assets. Since then, Robinhood has regained its momentum by broadening its product offerings, increasing monetization, and steadily expanding its reach into financial services.

From 2020 to 2024, revenue more than tripled to $2.95 billion, while the number of funded customers increased from 12.5 million to 25.2 million. Profitability is also significantly better with adjusted EBITDA becoming positive again in 2023 and further increasing in 2024, and the company becoming GAAP profitable as well.

Growth Is Accelerating, Not Stalling

That broader environment of rising incremental sales for the company’s latest quarter suggests a recovery is picking up speed, not stalling out. Revenues for the first nine months of 2025 soared 65% year-over-year to $3.19 billion, and Adjusted EBITDA more than doubled, increasing by 116% to $1.76 billion. GAAP net income was $169 million, more than 15 times higher. Part of that performance is due to the acquisition of TradePMR, but the organic growth has been strong.

User metrics are also increasing, around 11 million monthly active users. Funded accounts have grown to 26.8 million as of 3Q25, a 10% YoY increase. Even more striking is the increase in higher-value customers: Gold subscribers who pay for premium features such as margin access and higher interest on cash balances, rose 77% to 3.9 million. This trend indicates that revenue per user is also improving together with headline user growth, which is essential to maintaining long term profitablity.

Wall Street is betting that this momentum will continue. Full year revenue and adjusted EBITDA are expected to grow by 53% and 77%, respectively, and revenue and EBITDA are expected to grow significantly on a compounding basis through 2027, based on consensus estimates. A lot of that optimism is based on Robinhood’ s bid to become a broader fintech platform, including more traditional banking, wealth management, and AI-assisted investment tools.

New catalysts are broadening the market that can be addressed

Robinhood is opening up additional channels for growth besides its main brokerage platform. Among the more ambitious tokenization projects is that of U.S. Treasuries, stocks, ETFs and even special-purpose vehicles (SPV) that hold stakes in private companies. By launching these instruments on its own blockchain platform, the company seeks to deliver the benefit of faster settlement and lower transaction costs than traditional models.

At the same time, its management has indicated that it is open to acquisitions to grow its customer and assets base, and it is moving into adjacent markets such as sports prediction and other event-based trading products. Going global is another lever, with recent bolt-ons in Indonesia underscoring this strategy. Collectively, the efforts aim to ensure Robinhood stays relevant if traditional retail trading becomes more cyclical.

What the recent pullback really indicates

Hood stock falls after weaker than expected November trading volumes: following a robust fundamental tale, HOOD stock has stumbled recently after the company reported softer month-over-month trading volumes for the month of November. Equity trading volumes decreased 37%, while options and crypto volumes fell 28% and 12%, respectively. While overall platform assets declined only slightly and most numbers were still rising year over year, the market read the data as a potential sign of slowing activity, and it responded.

It didn't chase away everyone. Cathie Wood’s Ark Invest was buying the dip, snapping up more than $30 million in Robinhood shares across its funds, catapulting the company to significant positions in both the ARK Innovation and ARK Fintech & Blockchain ETFs. The decision suggests that the November slowdown was an aberration, the product of an exceptionally strong performance in October and a temporary downward tick in crypto markets rather than a fundamental shift in the business.

Whether that assessment turns out right will be clearer with the next batch of trading reviews and earnings. In the near term, the sentiment could be quite reactive to further indication of volume volatility.

Valuation and Key Risks

Hood stock is no longer cheap at these levels. Based on different metrics, the share seems to be trading at a high multiple on a forward-looking basis on both earnings and adjusted EBITDA. That valuation can be rationalized if Robinhood keeps growing like it has over the past year. But if the volume of trade slows more significantly than expected or if new initiatives take longer than anticipated to scale up, the multiple could contract sharply.

The company’s dependence upon market sentiment and trading volume also means that its results will continue to be cyclical. A sustained risk-off environment, or a persistent weakening in trading of crypto and options, would also be likely to put pressure on the growth of revenue and on margins. Competition from other fintech platforms and traditional brokers, including ones frequently compared under categories such as sofi vs robinhood, is another long-term issue.

How Investors Should Think About HOOD Stock Now

For investors assessing whether hood stock price is high today or not, the exposure is largely related to time and risk. In the near-term, some short-term volatility in monthly trading data and earnings reports persists, and a premium valuation leaves little room for disappointment. Longer term, however, Robinhood’s growing ecosystem, expanding EBITDA profitability and ability to pivot beyond its original brokerage model, all suggest a path for sustained growth.

If it can continue converting active users into higher-value subscribers, add new asset classes and markets, and sustain that momentum in revenue, today’s valuation may still prove reasonable in hindsight. In that case, the recent pullback could be considered as nothing more than a pause in a longer term uptrend rather than the beginning of a reversal. For a long-term-focused investor who believes the platform can continue to reshape retail finance, Robinhood is a high risk, high reward wager and not a story that has already run its course.