Robinhood (HOOD) Stock: Wall Street Says Buy the Dip as Cathie Wood’s ARK Invest Loads Up

TLDR:

Robinhood reported Q1 earnings of $0.37 per share, beating analyst expectations of $0.33 Revenue jumped 50% to $927 million, with transaction-based revenues up 77% to $583 million Monthly active users rose to 14.4 million but missed forecasts of 15.1 million HOOD stock fell 5% after earnings despite the beat Cathie Wood’s ARK Investment purchased 210,700 shares valued at $9.8 million after the dip

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Robinhood Markets, Inc. (HOOD)

Robinhood Markets reported strong first-quarter earnings that beat Wall Street expectations, but concerns about user growth and crypto trading volumes sent shares lower. The mobile brokerage firm delivered impressive financial results with earnings per share of 37 cents, more than double the 18 cents reported in the same quarter last year.

Revenue climbed 50% to $927 million, exceeding analyst forecasts of $920 million. This growth was driven by a 77% increase in transaction-based revenues, which reached $583 million.

Cryptocurrency trading was a major contributor to Robinhood’s performance. Crypto revenue doubled from last year to $252 million, beating analyst expectations of $247 million. However, this represented a decline from the $358 million reported in the previous quarter.

Options trading also showed strong performance. Revenue from options increased 56% to $240 million, slightly ahead of the $239 million forecast by analysts.

Equities revenue rose 44% to $56 million but fell short of the $60 million that analysts had expected.

User Growth Concerns

Despite the financial gains, Robinhood’s monthly active users grew to only 14.4 million. This was up from 13.7 million last year but down from 14.9 million in the fourth quarter of 2024. The figure also missed analyst expectations of 15.1 million monthly users.

The company’s monthly metrics report revealed that crypto trading volumes have been declining. Notional crypto volumes fell to $14.4 billion in February from $35.2 billion in November.

This decline aligns with broader trends in the cryptocurrency market. The total crypto market cap dropped from its peak of $3.7 trillion in December to $2.79 trillion by the end of February.

Bitcoin, which reached a record high above $109,000 in January, fell to around $84,000 in February before recovering to about $94,000 by late April. Other popular cryptocurrencies on Robinhood’s platform, Ethereum and Dogecoin, are down 55% and 63% from their December peaks, respectively.

The number of options contracts traded has remained steady at over 160 million for the first three months of 2025.

ARK Invest Buys the Dip

Following the 5% drop in Robinhood’s stock price after the earnings announcement, famed investor Cathie Wood made a move. Her firm, ARK Investment Management, purchased 210,700 shares of HOOD on May 1, valued at approximately $9.8 million.

This purchase continues Wood’s pattern of investing in Robinhood. In early April, ARK acquired 36,250 shares worth about $1.39 million, and in March, the firm bought 143,855 shares for around $5.6 million.

These ongoing investments suggest Wood maintains long-term confidence in the online brokerage platform, despite short-term market fluctuations.

Analysts have mixed views on Robinhood’s prospects. John Todaro of Needham lowered his price target to $58 from $62 but still recommends buying the stock. He noted stronger-than-expected trading activity in stocks and options during Q1 2025 and highlighted the growth in Robinhood’s Gold card user base, which doubled from 100,000 to 200,000.

However, Todaro expressed concern about softening crypto trading volumes and expects them to decline by about 48% in Q2, following broader industry trends.

According to TipRanks, HOOD stock has received a Moderate Buy consensus rating, with 14 Buys and 6 Holds assigned in the last three months. The average share price target is $61.78, suggesting a 32.52% upside potential from current trading levels.

Robinhood stock is up more than 25% this year despite pulling back from its February peak. The shares are currently trading well below their February 13 high of $66.91 but have recovered from their April 7 low of $29.66.

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