Robinhood (HOOD) Surges 2.27% Amid Prediction Market Expansion and AI-Driven Rebranding

Summary
• Robinhood’s stock price hits $118.43, up 2.27% from $115.80
• Intraday range spans $118.23–$124.25, reflecting volatile trading
• Analysts highlight prediction markets and AI tools as catalysts for growth

Robinhood Markets (HOOD) is surging on December 18, 2025, as investors react to its aggressive expansion into prediction markets and AI-driven services. The stock’s 2.27% intraday gain follows a strategic pivot toward financial and wagering platforms, with prediction markets now contributing 10% of revenue. High turnover of 13.45 million shares underscores renewed institutional and retail interest in the fintech renaissance.

Prediction Markets and AI Catalysts Drive HOOD’s Rally
Robinhood’s stock surge is fueled by its rapid scaling of prediction markets, which now generate hundreds of millions in run-rate revenue. The company’s recent upgrades to its Cortex AI assistant and acquisition of MIAXdx—a CFTC-licensed derivatives exchange—position it as a hybrid financial and wagering platform. Analysts at Truist and Investec have upgraded HOOD to Buy, citing its transition from a zero-commission broker to a diversified fintech leader. The stock’s 170% year-to-date gain reflects investor confidence in its ability to navigate regulatory scrutiny while capturing growth in event-based contracts and AI-driven services.

Diversified Financials Sector Mixed as HOOD Outperforms
The Diversified Financials sector is broadly mixed, with The Charles Schwab (SCHW) down 0.17% despite HOOD’s outperformance. While Schwab’s traditional brokerage model faces margin pressures, Robinhood’s shift to high-margin services like prediction markets and Net Interest Income (NII) has created a structural advantage. HOOD’s 52-week high of $153.86 and 62.47 P/E ratio suggest it is being valued more as a tech disruptor than a traditional broker, diverging from sector peers focused on interest rate cycles.

Leveraged ETFs and Options Playbook for HOOD’s Volatility
• 200-day average: $93.56 (well below current price)
• RSI: 39.29 (oversold territory)
• MACD: -2.12 (bearish divergence)
• Bollinger Bands: $104.34–$142.85 (current price near lower band)

Robinhood’s technicals suggest a short-term rebound after a bearish engulfing pattern and oversold RSI. The Direxion Daily HOOD Bull 2X ETF (HODU) and Roundhill HOOD WeeklyPay ETF (HOOW) offer leveraged exposure to a potential bounce. For options, HOOD20251226C120 (strike $120, 53.54% IV, 36.93% leverage) and HOOD20251226P115 (strike $115, 58.63% IV, 41.76% leverage) stand out. HOOD20251226C120 offers high gamma (0.0398) and theta (-0.449) for a 5% upside scenario payoff of $118.43–$124.35. HOOD20251226P115 provides downside protection with a 37.04% price change ratio. Aggressive bulls should target a break above $123.59 (middle Bollinger Band), while cautious traders may short the $115.80–$118.23 range.

Backtest Robinhood Markets Stock Performance
The backtest of HOOD's performance after a 2% intraday surge from 2022 to the present shows favorable results. The 3-Day win rate is 56.84%, the 10-Day win rate is 61.52%, and the 30-Day win rate is 63.48%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 20.73% over 30 days, suggesting that HOOD can deliver significant gains even after the initial 2% surge.

HOOD’s Rebound: A Bullish Setup or Regulatory Risk?
Robinhood’s 2.27% rally reflects optimism in its AI-driven rebranding and prediction markets, but regulatory risks loom. The stock’s 39.29 RSI and bearish MACD suggest a volatile near-term path, with key support at $114.97 and resistance at $124.78. Investors should monitor the $120 call for a breakout signal and the $115 put for downside protection. With the sector leader SCHW down 0.17%, HOOD’s divergence highlights its unique growth narrative. Act now: Buy HOOD20251226C120 if $120 breaks, or short the $115–$118 range for a mean reversion trade.