Shares of Robinhood Markets Inc. (HOOD) declined approximately 1% in premarket trading Wednesday, extending losses after a 6.3% drop in the prior after-hours session. The movement follows the company's release of fourth-quarter financial results, which revealed revenue that fell short of Wall Street expectations despite reaching a record level.
Revenue Mix Shifts as Crypto Trading Cools
The brokerage reported total revenue of $1.28 billion for the quarter ended December 31, 2025, missing the consensus analyst forecast of $1.34 billion. A significant 38% year-over-year decline in cryptocurrency trading revenue to $221 million was the primary driver of the shortfall. This downturn offset robust growth in other segments, where equities revenue jumped 54% and options revenue increased 41%.
Chief Financial Officer Shiv Verma noted in commentary that while the platform's most active cryptocurrency traders remained engaged, a larger proportion of activity migrated to lower-priced tiers, which compressed the firm's rebate rate and pressured overall crypto revenue. The performance underscores Robinhood's ongoing sensitivity to volatility in digital asset markets, which have experienced a prolonged cooling period after a previous cycle of intense retail interest.
Broader Platform Growth and Strategic Expansion
Despite the crypto headwinds, several key metrics demonstrated substantial growth. Total platform assets surged 68% from the prior year to $324 billion. Net deposits for the quarter were $15.9 billion, and the margin book—representing customer borrowing for trading—soared 113% to $16.8 billion. For the full 2025 fiscal year, Robinhood posted net revenue of $4.5 billion, which management described as a record for deposits, trading volumes, revenue, and profit.
The company is aggressively expanding beyond its core commission-free trading roots. CEO Vlad Tenev has framed the strategy as building a "Financial SuperApp," incorporating banking services, advisory offerings, and prediction markets. Activity in these prediction markets, where users can trade contracts on event outcomes, reached 8.5 billion contracts during the quarter. According to industry reports, much of this volume is concentrated around sports-related contracts, introducing potential seasonal volatility tied to major sporting events.
Rising Costs and Forward Guidance
Looking ahead, management anticipates significantly higher operating expenses as it funds this expansion. The company provided guidance for 2026 operating expenses, including share-based compensation, to range between $2.6 billion and $2.725 billion. This projected increase is attributed to heightened marketing spend, continued product development, international expansion efforts, and the full-year absorption of costs related to recent acquisitions like the cryptocurrency exchange Bitstamp and the advisory platform TradePMR.
In a show of confidence, the company also disclosed it repurchased $100 million worth of its own shares during the fourth quarter. Early data for January 2026 suggests strong momentum continues, with net deposits of $4.5 billion, margin balances up 121% year-over-year to $18.4 billion, and crypto notional trading volume of $22.9 billion.
Market Context and Investor Concerns
The broader cryptocurrency sector showed weakness early Wednesday, with Bitcoin prices down roughly 2.4% and shares of crypto exchange Coinbase (COIN) falling about 2.8% premarket. For Robinhood investors, the core question remains whether accelerating growth in stocks, options, and newer subscription products can sufficiently counterbalance potential sustained weakness in digital asset trading, which has historically been a high-margin revenue stream.
Additional risks loom on the regulatory front. A potential crackdown by authorities on prediction markets, particularly those linked to sports betting, could pressure a nascent but growing revenue source. As trading commenced at the 9:30 a.m. ET market open, analysts were closely watching whether the company's strong early-year deposit and trading momentum could persist following the earnings-driven volatility.
