Robinhood’s revenue doubled in the third quarter, and its stock has made significant gains during the past few years.
However, Robinhood is highly dependent on an active trading market, particularly in riskier options and cryptocurrencies.
If a bear market emerges in 2026, it’s unclear how Robinhood will sustain its momentum.
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Robinhood (NASDAQ: HOOD) stock surged in 2025 as the company expanded its user base and enhanced its trading platform with additional services. The result has been an impressive share price gain of more than 200% during the past year.
However, despite the platform’s popularity and the company’s performance, there are some reasons to doubt that Robinhood will be able to sustain the momentum in 2026. Here’s why investors shouldn’t buy Robinhood in 2026 and some potential warning signs for current shareholders.
Image source: Getty Images.
Part of Robinhood’s impressive gains is the result of legitimate growth. The company’s revenue doubled in the third quarter to $1.3 billion, and non-GAAP (adjusted) earnings increased 259% to $0.61 per share. Robinhood also increased its average revenue per user by 82% to $191.
Some of that growth was fueled by more customers flocking to Robinhood, as total users reached 26.8 million in the quarter, representing a 10% increase from the year-ago period.
However, despite those impressive results, it’s essential to note that Robinhood’s rapid growth is largely due to the booming stock market. The S&P 500 has gained a phenomenal 75% during the past three years. Many cryptocurrencies have also performed well, with Bitcoin‘s value rising by more than 400%.
Much of Robinhood’s revenue is generated by transactions, with crypto investments and options trading being two important segments for the company. Both of these are inherently risky areas of the market, which makes Robinhood vulnerable if the good times come to an end soon.
All of this matters in the context of Robinhood’s share price because the company’s growth is closely tied to the market’s performance. Robinhood went public in 2021, and since then, investors have experienced surging stock and cryptocurrency prices. Considering that Robinhood has yet to weather a bear market, investors betting on this high-flying stock right now are investing in a company with an unproven track record during difficult times.
I understand why some investors may want to hold on to their Robinhood shares right now. After all, the company’s top and bottom lines are growing, and it’s adding new users.
I think a case can be made for holding on to your shares for a bit longer, as long as the company continues improving. However, I would also caution that Robinhood’s stock could experience significant declines if the U.S. economy begins to slow down.
We’ve already seen some indications that this is happening, as unemployment ticked higher to 4.6% in November and the number of October layoffs reached a 22-year high for that month. Some job gains were made in November, which creates some mixed signals for the economy, but the big picture here is that Robinhood investors should keep a close eye on any significant economic shifts.
Eventually, the bull market we’ve experienced for the past several years will come to an end. If the economy slows significantly or enters a recession, investors are likely to pull back on some of their riskier investments, including cryptocurrencies. A significant downturn in the market would likely cause Robinhood’s share price to fall. Considering that many younger investors haven’t yet experienced a bear market, a broad decline might lead them to quickly sell off stocks to avoid losses.
All of this means that Robinhood investors may be better off taking their returns soon, rather than waiting for the stock to march higher in 2026. If a bear market is around the corner, Robinhood will likely be affected more than some stocks — and the company hasn’t been around long enough to prove it knows how to grow during a prolonged market decline.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Is Robinhood a Buy, Sell, or Hold in 2026? was originally published by The Motley Fool
