Robinhood Is Down 25% This Year-Why Bernstein Sees 78% More Upside

A strong quarter still triggered a sell-the-news reaction

Robinhood just posted record revenue of $1.31 billion, record net deposits of $22 billion, and 13 business lines generating $100 million or more in annualized revenue. Even so, the stock still slipped after the print, from roughly $89.7 to $89.3 in post-earnings trading. That suggests investors were not arguing with the quarter's results so much as staying cautious on the valuation.

Bernstein is still calling for a $160 price target on HOOD, implying about 78% upside from where the shares were trading in late-July around the high-$80s. The core opportunity is straightforward: if Robinhood's broader platform story is holding up, the next move higher needs less from the business and more from investor perception.

If investors still think of Robinhood mainly as "the retail trading app," they may undervalue what happened in the latest quarter. In Q2, prediction-market revenue rose more than 10x year over year to $156 million, ahead of $129 million from equity trading and $100 million from crypto trading. That shift matters because Robinhood is no longer dependent on one narrow trading cycle for growth.

New product rails are widening the platform

Bernstein's higher target also rests on that broader mix. The firm points to the Bitstamp integration, Robinhood Chain, tokenized stocks, and Robinhood Earn as possible new revenue drivers. In practical terms, Robinhood is trying to own more of the user journey: where users hold cash, where they seek yield, which rails settle activity, and which markets they use when equities are quiet.

The infrastructure is starting to show usage beyond the launch phase. Bernstein highlighted Robinhood Chain's $12 billion-plus DEX volume as evidence that the ecosystem is attracting liquidity. If that activity keeps building, Robinhood can generate revenue from more than just the consumer app's trading surface.

User engagement is still a key input

Robinhood's product push also needs continued engagement to work. Its home page now promotes Agentic Trading and related tools alongside stocks, crypto, options, and portfolio management. That does not prove monetization yet, but it does show the company is trying to deepen habits and keep more user activity inside the ecosystem.

The bull case still depends on steadier deposits and activity

July's drop in funding is the main stress test

The market's skepticism is understandable. After a record quarter, net deposits reached a record $22 billion, but July is tracking nearer to $4 billion. That does not automatically mean the business is breaking. In this kind of market, extreme engagement can fade. What matters is whether the cooling looks cyclical or reflects demand that was mostly event-driven.

The real debate is cycle versus structure

Bulls can point to several structural positives: record revenue, a broader set of monetized products, and more business lines reaching the $100 million annualized threshold. Bears, though, will focus on the parts of the business most exposed to sentiment, especially crypto activity and whether new products can sustain momentum.

That is why the next few weeks matter. If funding and usage stay reasonably firm, the post-earnings selloff may look more like an overreaction than a valid re-rating. If those metrics keep softening, skeptics will have more ground to argue that the multiple should stay closer to a trading-cycle benchmark.

What needs to happen for the 78% upside case to work

For the upside story to keep working, investors need to treat Robinhood as more than a trading-cycle stock. The market has to start pricing Bitstamp, Robinhood Chain, tokenized stocks, and Earn as serious growth drivers rather than side projects.

What to watch next

• Deposits: Funding needs to stabilize after July net deposits tracking towards $4 billion looked softer than the quarter's record pace.
• Crypto activity: Investors need evidence that weakness in crypto was a pause, not the start of a trend.
• Prediction markets:event contracts revenue of $156 million matters because it shows users are spending for outcomes, not just stock trades.
• Infrastructure adoption:Robinhood Chain's $12B+ in DEX volume is only useful if it keeps drawing more activity into Robinhood's own rails.

If those signals improve or at least hold up, the gap between current pricing and Bernstein's outlook becomes easier to understand. If they weaken, the market's caution will look justified.