Robinhood stock falls despite record Q4 earnings amid questions over prediction markets

Robinhood shares moved lower after the company released its fourth-quarter earnings, as investors weighed strong headline results against lingering questions about the firm’s growing emphasis on prediction markets and its plan to funnel those users into longer-term investment products.

The company reported record fourth-quarter revenue of $1.28 billion, up 27% year over year, and full-year revenue of $4.5 billion, a 52% increase from 2024. Net income for the quarter came in at $605 million, or $0.66 per diluted share, while funded customers rose 7% year over year to 27 million. Despite those gains, the stock declined as attention shifted to Robinhood’s evolving business mix and longer-term strategy.

On the earnings call, CEO Vlad Tenev pointed to prediction markets as the company’s fastest-growing product. “In Q4, prediction market volumes doubled, more than doubled yet again, with over 12 billion contracts traded in 2025, which is the first full year of prediction markets,” he said, adding that customers had already traded more than 4 billion contracts early in 2026.

Tenev framed the opportunity in ambitious terms. “I think we are just at the beginning of a prediction market super cycle that could drive trillions in annual volume over time,” he said, citing upcoming global sporting events, expansion beyond sports, and the launch of Rothera, Robinhood’s joint venture with Susquehanna International Group, as key drivers.

Robinhood prediction markets offering draws unwanted attention

But a separate part of the call quickly drew attention and criticism online. While discussing customer acquisition, Tenev said Robinhood is seeing “an increasing number of people coming to Robinhood… not because they want to trade equities or crypto, but because they’ve heard of our prediction markets offering.” He added that once users enter through prediction markets, the company aims to “easily cross-sell you to, you know, things like retirement or other products.”

That framing sparked sharp reactions on social media. “So you’re essentially landing customers as a gambling app now, and you’re cross-selling IRAs to people throwing $100 on the Patriots,” one user wrote on X. 

Another user quipped, “The bull case for HOOD is that you’ll… checks transcript… cross-sell prediction market gamblers retirement accounts?”

The pushback potentially shows that leaning into event-driven trading undercuts Robinhood’s pitch as a long-term investing platform. While the company stresses that prediction markets will expand beyond sports, the category is still closely associated with short-term, high-frequency speculation.

Tenev pushed back on the idea that the business is overly sports-centric. He noted that non-sports contracts are already gaining traction, pointing to a government shutdown contract that drove significant volume after the NFL season ended. Over time, he argued, prediction markets will broaden as more contracts are added and integrated more deeply into the app.

Chief Financial Officer Shiv Verma struck a similar tone, saying prediction markets are diversifying across sports and non-sports categories and becoming more economically attractive as Robinhood gains greater control over pricing and monetization through Rothera.

Still, the stock’s reaction suggests investors remain unconvinced that quick growth in prediction markets will translate into durable, high-quality earnings or that users drawn in by speculative contracts will meaningfully adopt retirement and wealth-building products.

Featured image: Robinhood

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