Prediction: Robinhood Stock Is Going to Plunge by 50% (or More) Over the Next 12 Months

Core Viewpoint - Robinhood's stock has seen significant growth recently, but concerns about the sustainability of this rebound suggest a potential decline in the near future [2][12]. Revenue Breakdown - Robinhood's revenue consists of transaction revenue and net interest revenue, with transaction revenue being the most critical component [4]. - In Q2 2025, transaction revenue reached $539 million, a 65% increase year-over-year but an 8% decline sequentially [5]. - Cryptocurrency trading revenue accounted for $160 million of total transaction revenue, up 98% year-over-year but down 37% sequentially, indicating a loss of momentum [6][8]. Market Trends - The decline in speculative tokens like Dogecoin and Shiba Inu has led some clients to move away from crypto trading, impacting Robinhood's revenue [7]. - The company previously experienced a significant drop in cryptocurrency revenue, which fell 75% from Q2 2021 to Q2 2022, suggesting a similar trend may be emerging [8]. Interest Rate Impact - The U.S. Federal Reserve's interest rate cuts could negatively affect Robinhood's net interest revenue, although the company's margin loan book has increased by 72% since the cuts began [9]. - Net interest revenue reached a record $357 million in Q2 2025, up 25% year-over-year, but this growth may not be sustainable [10]. User Engagement - The number of monthly active users has declined for two consecutive quarters, now at 12.8 million, which could hinder revenue growth [15]. Valuation Concerns - Robinhood's stock is trading at a price-to-sales ratio of nearly 29, significantly above its long-term average of 9.2, indicating potential overvaluation [12]. - To justify its current valuation, Robinhood would need to increase its trailing-12-month revenue by 180% quickly, or the stock price may need to decline by over 50% [13][14].