New York, January 20, 2026, 07:22 EST
- Robinhood shares slip in premarket trading as questions resurface over its lofty valuation
- Recent commentary points to reliance on trading surges, with no real test from a bear market yet
- Bulls are betting on prediction markets and fresh products to fuel the next wave of growth
Robinhood Markets (HOOD) dipped about 1.4% in premarket trading Tuesday, slipping to $108.74. That values the brokerage app close to a $127 billion market cap. The price-to-earnings ratio hovers near 58, indicating investors are shelling out a steep premium for the company’s earnings.
The dip did little to settle the debate around Robinhood’s stock: is there more upside, or have the shares already outpaced the company’s fundamentals?
This matters because Robinhood wants to prove it can grow no matter how markets perform in 2026—not just when retail trading surges. The stock’s current valuation makes that challenge even bigger.
A column published Monday flagged Robinhood’s brokerage arm as exposed, caught between low barriers to entry and bigger rivals with deeper pockets. It pointed out that a significant share of the company’s revenue still depends on routing customer orders to market makers—a practice known as payment for order flow. While the article recognized Robinhood’s expansions into banking products and event-driven trading, it slammed the shares as expensive. Analysts forecast roughly 22% revenue growth by 2026, yet the stock trades near 50 times the anticipated $2.44 earnings per share. (The Motley Fool)
On Jan. 18, a report highlighted Robinhood’s shares have jumped 1,100% over the last three years but warned the stock looks “priced for perfection,” sporting a P/E ratio close to 49 versus the tech sector’s average of 44. The piece also noted Robinhood hasn’t faced a bear market—a prolonged slump—since going public in 2021, a period when trading volumes usually fall. (Nasdaq)
Bulls remain anchored to sell-side research for backing. A Jan. 19 recap spotlighted earlier calls from Piper Sandler and Mizuho, which set price targets at $155 and $172, respectively. Those analysts highlight Robinhood’s strong grip on younger U.S. investors and suggest its prediction markets might outperform certain crypto brokers. (Insidermonkey)
Robinhood has been carving out its space in that financial niche. “We as a firm are going to be looking to see if there is an acquisition that’s available,” JB Mackenzie, vice president and general manager at Robinhood, told Reuters in October. The company is zeroing in on event contracts — bets that pay off if specific outcomes happen — with Piper Sandler estimating Robinhood’s revenue run-rate from this area at more than $200 million as of September. (Reuters)
But the product pulls Robinhood into a tougher policy and competitive fight. “There are a plethora of competitors. But with us being early to market, we’ve been able to fine-tune our product,” Adam Hickerson, senior director of the company’s futures business, told Reuters last month, as some state regulators called for tighter oversight of event contracts. Critics say these contracts resemble sports betting and might encourage riskier trades among retail investors. (Reuters)
Competition is already baked in. Charles Schwab, a traditional broker, matches low commissions, while Kalshi plays a dual role as both partner and competitor in event markets. Coinbase remains a key player in crypto trading.
Investors are focused on one key question: will Robinhood keep expanding its user base and revenue if market activity cools? And can new products ease its dependence on trading surges to boost profits? Until the numbers show those shifts, the “millionaire-maker” label carries both attention and skepticism.
