Robinhood Stock Drops on Revenue Miss, Regulatory Concerns

Robinhood Markets, Inc. (HOOD) shares plunged Thursday after the online brokerage company missed Wall Street’s quarterly revenue expectations due to a customer promotion program. The stock broke out above the top trendline of an ascending triangle earlier this month, though the recent bullish price momentum came to a halt after the company's third-quarter results.



Investors should watch important support levels on Robinhood's chart around $24, $22, and $20.50. The measuring principle, which calculates the depth of an ascending triangle near its widest section and adds that amount to the pattern’s breakout point, forecasts an upside target in the stock of $31.50.



The company, which posted third-quarter revenue of $637 million, below the $653.1 million consensus estimate of analysts polled by Visible Alpha, said revenues were reduced by $27 million in the period "due to matches paid to customers on transfers and deposits." Robinhood shares were down 17% at around $23.50 in late trading Thursday. Despite the decline, the stock has gained 85% since the start of the year, boosted by a recovery in retail trading volumes and the recent announcement of new products at its HOOD Summit 2024 event.

Robinhood's trading activity and user base have evolved significantly in recent months, with the company reporting strong growth in various metrics. In the fourth quarter of 2024, Robinhood's total net revenues increased by 115% year-over-year to a record $1.01 billion, driven by a 200% increase in transaction-based revenues (Robinhood Markets, Inc., 2025). This growth was primarily due to a 700% increase in cryptocurrencies revenue, an 83% increase in options revenue, and a 144% increase in equities revenue.

The company's user base also expanded, with Funded Customers increasing by 8% year-over-year to 25.2 million, and Investment Accounts growing by 10% to 26.2 million (Robinhood Markets, Inc., 2025). Assets Under Custody (AUC) increased by 88% year-over-year to $193 billion, driven by continued Net Deposits and higher equity and cryptocurrency valuations.

Regulatory challenges and compliance issues have played a significant role in the recent performance of Robinhood's stock. In December 2020, the SEC fined Robinhood $65 million for failing to disclose its PFOF practice to customers, which led to criticism and potential reputational damage. Additionally, Robinhood faced criticism for its role in the 'eme stock' mania and the temporary halt of trading in certain stocks, which further impacted its reputation and stock performance.

In January 2025, Robinhood agreed to pay a $45 million penalty following an investigation by the SEC into anti-money laundering (AML) and regulatory compliance failures. The SEC found that Robinhood systematically failed to initiate timely reviews of potentially suspicious transactions, complete reviews within a reasonable time, and file SARs promptly. This backlog was eventually reduced, but the company's compliance challenges were exacerbated by its rapid growth, with the number of customer accounts surging from 5 million in 2019 to nearly 23 million by 2021.

These regulatory challenges and compliance issues have likely contributed to the volatility and fluctuations in Robinhood's stock price. As the company continues to grow and adapt to changing market conditions, addressing these challenges will be crucial for maintaining its competitive edge and ensuring the trust of its users. By implementing comprehensive reforms and enhancing its compliance systems, Robinhood can work towards mitigating the impact of regulatory issues on its future prospects.

In conclusion, Robinhood's stock price declined today due to the company missing Wall Street's quarterly revenue expectations and ongoing regulatory challenges. Despite the decline, the company's trading activity and user base have grown significantly in recent months, leading to an increase in the company's stock price. However, the stock price remains volatile and subject to market fluctuations, as seen in the recent decline following the earnings report. Addressing regulatory challenges and maintaining the trust of users will be essential for Robinhood's future success.