Bernstein Sees Rebound Potential for Robinhood Despite Q1 Earnings Miss

Robinhood (HOOD) faced immediate investor pressure after reporting first-quarter results that fell short of Wall Street expectations. The primary drag was a sharp 47% year-on-year decline in cryptocurrency-related revenue, reflecting a broader industry downturn that has seen significant value erosion despite a strong S&P 500. Despite the immediate share price decline, Bernstein has reaffirmed its "outperform" rating and a $130 price target. Analysts argue that the market is overemphasizing temporary crypto weakness while ignoring the successful diversification of the company's core business model. Financial results showed adjusted earnings per share of $0.39, missing estimates by nearly 10%, while total revenue of approximately $1.1 billion came in 7% below expectations. Adjusted EBITDA also missed targets by 9%, landing at $534 million. However, the broader business demonstrated resilience. Total revenue grew 15% compared to the previous year, and transaction-based revenue climbed to $623 million. A significant driver was the surge in prediction markets, where "other transaction revenue" jumped 320% year-on-year to $147 million. Robinhood's expansion into traditional banking is also gaining traction. Net deposits have surpassed $2 billion, and the Gold credit card now has over 800,000 users with an annualized purchase volume of $15 billion. CEO Vlad Tenev has emphasized a strategic shift away from Bitcoin price cycles toward long-term financial infrastructure. Looking ahead, Bernstein forecasts 2026 earnings per share of $2.65, citing the upcoming mid-2026 launch of the Rothera prediction markets exchange and a recovery in crypto as primary catalysts. The company continues to support its valuation through aggressive buybacks, having spent over $300 million this year under a $1.5 billion authorization.