Robinhood's Revenue Growth Decelerates as Crypto Revenue Drops, Raising Stakes for Event Contracts and Margin

What happened

Robinhood reported Q1 2026 revenue of $1.067B, up 15% year-over-year, a sharp deceleration from the 52% growth in FY2025 as crypto trading revenue halved to $134M from $252M. Meanwhile, event contracts surged to $104M from $3M and net interest revenue grew 24% to $359M, but net income was nearly flat at $346M (+3% YoY) as operating expenses climbed. The deceleration highlights Robinhood's pivot away from crypto dependency toward event contracts and margin lending, though these newer engines face regulatory and credit risk. With the stock trading at 39.1x P/E, the market is pricing in sustained high-growth from event contracts, making Q2 and Q3 2026 crucial for validation. Investor focus now shifts to whether event contract revenue can hold near the $104M quarterly run-rate and whether margin growth can continue without credit losses.

Implication

The deceleration in revenue growth, particularly from crypto, reinforces our WAIT rating as the stock already trades at a premium multiple that depends on sustained high growth from event contracts and margin. While event contracts showed impressive traction at $104M, the near-flat net income and regulatory overhang on sports contracts introduce uncertainty. The 15% revenue growth rate is more in line with a mature brokerage, yet the valuation implies a growth stock, creating a disconnect. Investors should monitor Q2 2026 results for confirmation that event contract revenue is repeatable and that margin credit losses remain contained. Until then, patience is warranted; the attractive entry price remains around $70 per share, offering a better risk-reward profile.

Thesis delta

The deceleration in overall revenue growth, driven by crypto weakness, undermines the narrative of accelerating momentum and increases the burden on event contracts and margin interest to maintain earnings growth. This raises the bar for Q2–Q3 2026 to validate the sustainability of event contract revenue at or above $104M quarterly, without which the stock's premium valuation lacks support.