Tom Lee of Fundstrat recently recommended that investors avoid Robinhood (NASDAQ: HOOD) in 2026. The call came up for debate on CNBC’s Investment Committee, where panelists pushed back almost immediately. Analysts also noted the irony in Lee’s position.
Why Lee’s Position on HOOD is ‘Counterintuitive’?
Lee is often seen as a major proponent of crypto, so his turning bearish on Robinhood is interesting given how closely the stock tracks the crypto market.
Kevin Simpson, founder and CIO of Capital Wealth Planning, said he disagrees with Lee on HOOD. Robinhood’s second-quarter revenue rose 32% year over year to a record $1.31 billion, earnings per share climbed 48%, and net deposits hit a record $22 billion.
Simpson, however, acknowledged that HOOD valuation is very high and that investors haven’t made much money over the past year. He said he believes in CEO Vlad Tenev and that the next generation of investors is embedded in Robinhood’s ecosystem.
Joseph Terranova of Virtus Investment Partners said Lee’s position about HOOD is “counterintuitive.”
Bryn Talkington, Managing Partner of Requisite Capital Management, said she also disagrees with Lee on HOOD. Her view is that Robinhood remains driven by crypto and the stock can go higher if crypto rebounds.
HOOD Valuation
Robinhood (NASDAQ: HOOD) trades at a forward non-GAAP P/E of 38.33 against a sector median of 11.34, more than triple the typical peer and a 238% premium. On a trailing basis, the non-GAAP P/E is 38.50 versus the sector’s 11.86. On a GAAP basis, the P/E is 46.23 against a sector median of 12.05, a 284% premium.
Beyond Crypto
Bulls believe Robinhood is decreasing its dependence on crypto, and the company can grow despite crypto volatility. In the second quarter, crypto made up just 12.88% of transaction revenue in the quarter, down from a peak of 53% in the fourth quarter of 2024.
The diversification is coming from new products. Robinhood launched Robinhood Ventures Fund I to give Robinhood users access to private startups. Robinhood Gold subscribers rose about 39% year over year in the second quarter. Robinhood Gold is the company’s paid subscription tier. Users pay a recurring fee for perks like higher interest on cash, lower margin rates, and bigger instant deposits. It matters to bulls because subscription revenue is recurring and predictable, unlike trading fees that swing with the market. The company is also expanding in prediction markets, where users trade contracts tied to the outcome of events.
While we acknowledge the risk and potential of HOOD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HOOD and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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