You probably think of Robinhood (NASDAQ:HOOD) as the free stock trading app, or maybe the crypto one. That’s not really the story anymore. The fastest-growing part of the business right now is prediction markets, something almost nobody was talking about a couple years ago.
Event contracts brought in $156 million in FQ2 2026, more than equities trading and more than crypto. Bernstein took notice and raised its price target from $130 to $160. The real question isn’t whether this quarter was good. It’s whether this new business sticks around once the headlines that fueled it move on.
Bernstein Sees Double Digit Growth Potential
Event contract revenue went from roughly $10 million in the second quarter of 2025 to $156 million a year later. That’s a huge jump, and it’s already 20% of transaction revenue, trailing only options. Bernstein thinks this segment alone could grow 64% a year for the next few years.
The rest of the business isn’t just riding on that one story either. Equities trading revenue jumped 95% year over year while the S&P 500 gained 15% in the same stretch, and the overall quarter beat Wall Street’s numbers outright. Earnings came in at $0.62 a share on $1.31 billion in revenue. Strip out a one-time accounting benefit worth 14 cents a share, and adjusted earnings of $0.48 still beat the $0.43 analysts expected.
Robinhood Gold added 1.5 million members, up 39%, and the company keeps layering on credit cards and banking features to look less like a trading app and more like a full financial home base. Management even lowered its expense guidance, and said the savings came from new efficiencies, not belt-tightening, with some of that money going toward newer bets like Rothera and WonderFi.
The Crypto Business Has Gone Cold
Now the part that’s harder to spin. Crypto trading revenue fell 38% year over year and 25% from the prior quarter, and it’s sitting at less than 30% of where it peaked back in late 2024. Event contracts have papered over some of that, but look closer at where the growth actually came from. A lot of it rode on one-off events like the World Cup and the midterm elections.
That raises an uncomfortable possibility: the same investors who used to chase crypto swings may have just found a new place to gamble, not a lasting new business line. The broader numbers back up that caution. Total revenue growth slowed from triple digits a year ago to 32% this quarter. Robinhood’s push into AI agent trading adds a newer risk. Autonomous agents trading in milliseconds off the same signals can cause wilder price swings and thinner liquidity than usual.
Robinhood vs SoFi, What’s Wall Street Picking?
Hedge funds are still betting on Robinhood, with 84 funds holding it in Q1 2026 versus 83 the quarter before. SoFi Technologies (NASDAQ:SOFI), on the other hand, was held by 47 hedge funds at the end of the quarter, down from 56. Short sellers are also less bearish on HOOD, just 4.88% of Robinhood’s float is sold short, compared to 14.7% for SoFi.
Robinhood’s high-margin trading model and sudden prediction market windfall gave institutional investors a clear growth story to rally behind. But in the case of SoFi, institutional investors are still spooked by credit risks and loan-market headwinds despite the company posting record net interest income. And this is why Robinhood also carries the pricier tag, trading at 42 times forward earnings versus SoFi’s 27x.
The Takeaway
Robinhood found a way to keep growing even as crypto went cold, and investors have paid up for it. Whether that premium is earned comes down to one thing: is this prediction-market boom a real business, or a moment tied to a crowded calendar of elections and a World Cup?
If event contracts keep humming after those events pass, and AI agent trading or banking products actually gain traction, the bulls have their answer. If growth keeps decelerating and the market keeps shrugging off good headlines, the bears get theirs. Either way, the next couple of quarters should paint a clearer picture.
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 this cheapest AI stock.
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Disclosure: None.
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