Should You Buy Robinhood Stock Before Nov. 5, or Run for the Hills?

Core Insights - Robinhood Markets has seen its stock price triple this year, but these gains may be at risk of reversal due to declining core revenue and high valuation metrics [1][20] - The company has entered a partnership with Kalshi to introduce NFL and college football prediction markets, which could provide a new revenue stream, although it currently represents a small portion of overall business [2][6] Financial Performance - Robinhood is projected to report total revenue of $4.2 billion for the year, with prediction markets generating approximately $200 million annually, indicating that prediction markets are a minor segment of its business [8][9] - The company's transaction revenue peaked at $1 billion in Q4 2024, with $672 million coming from transaction fees, but has since faced a decline, particularly in cryptocurrency trading revenue, which dropped by 55% to $160 million in Q2 2025 [10][11] Market Context - The U.S. sports betting industry is valued at around $20 billion annually and is expected to grow to $33 billion by 2030, presenting a significant opportunity for Robinhood [6] - Despite the potential of the prediction markets, the current valuation of Robinhood, with a price-to-sales ratio of 33, is significantly higher than its historical average of 10.6, suggesting that the stock may be overvalued [16][18] Risks and Future Outlook - The upcoming third-quarter results on November 5 could trigger a stock correction if prediction market revenues do not meet expectations and if cryptocurrency revenues continue to decline [3][20] - The partnership with Kalshi, valued at $5 billion, may not substantially impact Robinhood's financial results in the near term, given the company's market capitalization of approximately $113 billion [19]