Stocks of Robinhood Markets have experienced a remarkable surge this year, tripling in value and seeing an impressive increase of 240% in 2025 alone. This rapid growth is largely attributed to the company’s recent partnership with Kalshi, which aims to bring prediction markets for NFL and college football to its platform. Although this development has opened up a potential new revenue stream, early indications reveal that prediction markets currently contribute a minor part of Robinhood’s overall business.
Robinhood has carved a niche for itself since its rise during the pandemic of 2020-2021, attracting a large base of young investors eager to engage in trading speculative stocks and cryptocurrencies. The company’s platform allows users to trade a variety of assets, including stocks, options, and cryptocurrencies, commission-free.
As the sports betting industry in the U.S. is projected to grow from approximately $20 billion to $33 billion by 2030, Robinhood is betting on its younger clientele, who are already drawn to high-risk investments, to embrace this new opportunity. This strategic pivot could prove crucial for the company’s future; however, the current scale of the prediction markets raises questions about the sustainability of its stock price.
A recent analysis from Piper Sandler estimates that Robinhood’s prediction market revenues hover around $200 million on an annualized basis. While CEO Vlad Tenev has confirmed these figures, they represent a small fraction of the company’s total projected revenue of $4.2 billion for the year. This disparity raises concerns regarding the justification of the stock’s steep rise, especially considering that Robinhood’s core revenue has seen a decline over the past two quarters.
A peak quarterly revenue of $1 billion was recorded in late 2024, with transaction fees from trades accounting for a significant portion. However, cryptocurrency trading—a major revenue driver—has faced considerable downturns. After peaking at $358 million, this segment plummeted by 55% in the second quarter of 2025, resulting in consecutive declines in overall transaction revenue.
Trends in the cryptocurrency market hint at a potential repeat of previous downturns, with significant coins like Dogecoin and Bitcoin showing marked depreciation from their recent highs. Such fluctuations have historically led to reduced engagement from investors, reminiscent of a similar scenario faced by Robinhood in 2021 and 2022.
Adding to investor concerns, the stock’s current price-to-sales (P/S) ratio stands at a staggering 33, a stark contrast to its average of 10.6 since the company’s IPO in 2021. This misalignment calls for caution, as analysts predict that without substantial revenue growth, the stock may need to correct by as much as 68% to align with historical benchmarks.
The valuation of Kalshi, recently placed at $5 billion during a private funding round, further complicates the picture, given Robinhood’s market cap of about $113 billion. This raises skepticism about how impactful the anticipated partnership could be in the near term.
Investors face a precarious situation as Robinhood nears its third-quarter earnings report on November 5. If prediction markets revenue falls short of expectations or if cryptocurrency engagement continues to wane, a steep correction in the stock price may be on the horizon. Thus, scrutiny on the upcoming financial results will be critical as the market evaluates the future trajectory of Robinhood and its innovative yet challenging business landscape.
