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Robinhood Markets Faces Customer Decline and Stock Challenges

Ellis HobbsAvatar
Written by Ellis Hobbs Reviewed by Jack Kellogg Fact-checked by Tim Sykes
Updated 12/28/2025, 8:13 am ET 12/28/2025, 8:13 am ET | 5 min 5 min read
Robinhood Markets Faces Customer Decline and Stock Challenges Thumbnail

Robinhood Markets Inc. stocks have been trading down by -2.43 percent amid evolving market dynamics impacting investor sentiments.

Finance industry expert:

Analyst sentiment – negative

Robinhood Markets, Inc. (HOOD) exhibits a mixed market position, with a reported total revenue of $2.95 billion and an EBIT margin of 22.8%, highlighting profitability within operations. However, the company faces challenges, evidenced by a pre-tax profit margin of -23.6% and substantial negative free cash flow of -$1.59 billion, indicating hurdles in profitability and cash generation. Despite a high gross margin of 90%, Robinhood’s valuation metrics, such as a price-to-book ratio of 12.4 and enterprise value of $13.34 billion, suggest significant market expectations. High leverage, with a total debt-to-equity ratio of 2.6, exacerbates financial strain, while a current ratio of 1.2 implies limited liquidity buffer.

From a technical standpoint, Robinhood’s recent weekly price action reflects a downward trend, with the stock’s closing price decreasing from $122.41 to $117.51. Notable volume patterns underscore selling pressure, particularly as the stock penetrated key support levels around $120. The dominant bearish trend is manifest in lower highs and lower lows, indicating potential further declines. Traders should consider a sell strategy, capitalizing on breakdowns below the $118 support, with attention to the $115 level as a critical point of congestion. Monitoring candle structures and volume surges can offer clearer entry points and validation of bearish momentum.

Recent catalysts, such as the decline in funded customers for November and share sell-off by the Chief Legal Officer, further influence Robinhood’s outlook negatively. Compared to industry benchmarks, the decrease of 130,000 in funded accounts and an 8.7% share price drop demonstrate vulnerability despite a year-over-year increase in platform assets and customer base. Robinhood remains exposed to external market shifts and legal challenges, potentially affecting its operational dynamics. Resistance is expected around $125, while downside risk looms with a potential breach below $115. The company exhibits challenging prospects in the near term, meriting caution among investors.

Candlestick Chart

Weekly Update Dec 22 – Dec 26, 2025: On Sunday, December 28, 2025 Robinhood Markets Inc. stock [NASDAQ: HOOD] is trending down by -2.43%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Financial Overview

The recent financial data paints a complex picture for Robinhood Markets. The reported decline in funded customers from October to November starkly contrasts with its year-on-year growth in the same metric, rising by a noteworthy 2.1 million. This dual trajectory highlights short-term challenges against a backdrop of longer-term expansion. The dip in total platform assets by 5% from the preceding month is significant, yet a 67% annual growth rate signals an underlying resilience in Robinhood’s asset accumulation strategies.

The company’s profitability ratios remain positive, with an EBIT margin at 22.8% and a robust gross margin of 90%. However, the company’s pretax profit margin comes in at -23.6%, leading concerns about operational expenses outweighing revenues. In the latest earning reports, operating cash flow stands at a deficit of $1.58 billion, revealing the operational expenditures outweigh the inflow of revenues, which poses significant financial management challenges.

Navigating the balance sheet, Robinhood presents a total equity value of $8.57 billion against a staggering $32.88 billion in total liabilities. The company’s quick ratio, resting at 0.8, paints a picture of its ability to cover short-term obligations. A net income of $556 million from continuing operations provides some positive financial affirmation amidst the pressures of declining customer metrics.

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Ellis Hobbs

Trainer and Mentor on Tim Sykes’ Trading Challenge
He teaches webinars on Tim Sykes’ Trading Challenge He treats trading like a business, not a hobby He emphasizes taking small risks — “If you get the process right, money is a forgone conclusion.”
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”