Robinhood's trading boom supports 46 times past earnings. I see slower sales growth and legal risk in event contracts, leaving 20% downside to $85.89. Sell.
Key points
- $1.31B in sales in Q2 FY26, up 32% from last year, as event contracts reached 12% of sales.
- $21.6B in average margin loans to customers in Q2 FY26, up 129% from last year, funding interest sales.
- $0.48 in core earnings per share in Q2 FY26 after removing a $0.14 fund gain, still 46 times past earnings.
The call
The market expects perfection to continue. At $107.29 a share the stock trades at 46 times past earnings. Keeping a 37 times multiple into next year needs $2.90 a share of earnings. That demands a 45% profit share on my sales view.
Quarterly revenue slows after event-contract spike ($ billions)SEC XBRL to Q2 FY26; Q3 FY26 onward yours. Oct 8, 2026.
I expect slower growth and thinner quality. I forecast $5.90B of sales next year, up 17% from this year. At a 36% profit share that leaves $2.32 a share of earnings. At 37 times earnings, meaning price per dollar of earnings, the shares are worth my target.
Valuation
| Driver | Estimate |
|---|
| FY27 sales | $5.90B next year |
| FY27 profit | $2.12B at 36% profit share |
| FY27 earnings per share | $2.32 on 915M shares |
| Multiple and target | 37 times earnings for $85.89 a share |
Half of sales ride options and rate sensitive interest- Options 26%26%
- Event contracts 12%11.9%
- Equities 10%9.9%
- Crypto 8%7.6%
- Net interest 30%29.7%
- Other 11%10.9%
Q2 FY26 10-Q filed July 29, 2026. Shares of total net revenue.
Big brokers with trading swings trade near 30 to 40 times cycle earnings. I pay 37 times for scale, record deposits and Gold loyalty. A 20% downside against small upside earns a sell.
Risks
- Event contracts face court bans that cut 12% of sales, which I would see in monthly contract counts falling.
- Trading and margin loans drop in a market fall, which I would see in platform assets and margin balances shrinking.
- Cash yields fall if rates drop, which I would see in net interest, meaning interest earned less paid, declining.
What would change my mind
Deposit growth above 25% a year with steady options volume through next year would prove durable compounding.