Compass Point has reduced its price target for Robinhood Markets (NASDAQ: HOOD) to $127.00 from $170.00 but maintained a Buy rating on the shares. The stock is trading around $85.60 and has experienced notable volatility, including a 60.48% gain over the past year while remaining down 24.31% year-to-date, according to the figures cited.
In its analysis, Compass Point singled out Robinhood's fourth-quarter EBITDA as coming in 9% below expectations. The shortfall was attributed primarily to weaker securities lending revenue and compressing take rates within the cryptocurrency and options trading franchises. Even with that miss, Robinhood's overall EBITDA was reported at $2.37 billion, alongside revenue growth of 74.58% over the trailing 12 months.
What appears to have prompted the price-target revision most directly was the firm's disclosure of operating expense guidance for 2026. Compass Point described Robinhood's projection for 18% growth in operating expenses as the "biggest surprise" from the company's recent filings. In response, the research house trimmed its own EBITDA projections to account for the higher anticipated expense base.
Despite the cost-related concerns, Compass Point noted that the company's January performance metrics showed "solid momentum across all segments," including cryptocurrency volumes that were better than feared. The firm nonetheless concluded that the elevated expense trajectory warranted a lower valuation, while still viewing the longer-term opportunity as constructive.
Compass Point emphasized several potential upside catalysts that it believes could sustain investor interest in the shares over time. Those items include prediction market internalization efforts, the so-called Trump Accounts initiative, and the prospect of large initial public offerings in 2026. The research note framed these elements as sufficiently meaningful to keep investor sentiment tilted toward the positive side despite nearer-term earnings and cost pressures.
Separately, Robinhood released fourth-quarter and full-year 2025 results showing record revenue and earnings per share that topped consensus. The company reported EPS of $0.66, ahead of an expected $0.60, while total revenue of $1.28 billion fell short of a $1.34 billion estimate.
Needham also adjusted its valuation for Robinhood, lowering its price target to $100 from $135 while maintaining a Buy rating, describing the fourth-quarter performance as "strong." The firm pointed to prediction markets as a standout area for the company, with January volumes reaching an all-time high of 3.5 billion contracts.
Key points
- Compass Point cut HOOD's price target to $127 from $170 but kept a Buy rating.
- Q4 EBITDA missed by 9%, driven by lower securities lending revenue and reduced take rates in crypto and options; full-company EBITDA is $2.37 billion.
- Robinhood guided for 18% operating expense growth in 2026, prompting reduced EBITDA forecasts despite January momentum across segments.
Risks and uncertainties
- Higher-than-expected operating expense growth could pressure margins and valuation - relevant to investors focused on fintech and broad market earnings dynamics.
- Volatility in securities lending revenue and crypto/options take rates introduces near-term earnings variability - a risk for financials and trading-focused sectors.
- Revenue missing consensus in the quarter, despite EPS beat, underscores sensitivity to top-line performance for market expectations and stock reactions.