Robinhood plunges to oversold territory as crypto slump deepens
Trading platform shares fall 3.2% with RSI at 8, marking extreme oversold conditions amid broader bitcoin-driven sell-off
Robinhood Markets shares dropped 3.2% to $87.07 on Tuesday, extending a steep decline that has pushed the stock to extremely oversold levels as weakness across cryptocurrency markets weighs on the retail trading platform.
The decline put Robinhood's relative strength index at 8.15, one of the lowest readings on record and a level that typically signals extreme oversold conditions to technical analysts. The stock has now fallen more than 44% from its October highs, with Monday's session seeing a nearly 10% plunge that pushed shares to seven-month lows.
The selloff comes amid a broader rout in crypto-linked financials, with bitcoin tumbling below $75,000 on February 1st to reach its lowest point since April 2025. The cryptocurrency has now declined more than 40% from its all-time high above $126,000, according to market data. Robinhood shares are closely correlated with crypto prices, as cryptocurrency accounts for approximately 15% of assets under custody and 21% of revenue for the company as of the third quarter.
"Meme stocks, Silver, Crypto, Spec assets all under pressure," Mizuho analyst Daniel J. O'Regan noted in recent commentary, questioning how much the weakness would impact Robinhood's trading volumes. His colleague at Mizuho, Dan Dolev, pointed to a potential positive catalyst in Robinhood's recent launch of a stocks and shares ISA in the UK with zero platform fees, no commissions, and a 2% cash bonus on eligible contributions made before April 2026.
Despite the recent steep decline, analysts remain broadly bullish on Robinhood's prospects. The stock currently carries an average price target of $150.15, suggesting potential upside of approximately 72.5% from current levels, according to market data. Of the 24 analysts covering the stock, 17 rate it a buy or strong buy, while 5 recommend hold and just two advise selling.
Robinhood's fundamentals have shown strength recently, with quarterly earnings growth of 259.5% year-over-year and quarterly revenue growth of 100%. The company reported earnings per share of $2.36 for the trailing twelve months, with a profit margin of 52.2%. However, the stock trades at a high valuation multiple, with a trailing price-to-earnings ratio of 42.15 and a price-to-sales ratio of 21.28.
The broader cryptocurrency market is facing significant headwinds, including rising real yields, a strengthening dollar, and a general deterioration in risk appetite. The market's Fear & Greed Index currently sits at 17, indicating "extreme fear" among investors. Speculation surrounding Federal Reserve leadership and fears of tighter monetary policy have also contributed to the risk-off environment, with traders growing increasingly concerned about higher interest rates under potential new leadership.
Robinhood's high beta of 2.45 makes it particularly sensitive to market swings, and the stock broke below its 200-day moving average last week, accelerating its downward momentum. The company's 76.5% institutional ownership suggests that professional investors are closely watching the developments, though the retail-focused nature of its business model means that retail investor sentiment remains a key driver.
Coinbase, another crypto-linked financial, fell 4.4% in the session, underscoring the sector-wide pressure. Analysts are estimating a significant drop in earnings per share and revenue for Coinbase's upcoming earnings report on February 12th, reflecting the broader contraction in cryptocurrency trading volumes.
For Robinhood, the upcoming earnings season and any developments in cryptocurrency regulation will be critical catalysts to watch. The company's international expansion, particularly in the UK market, could provide a new growth avenue as domestic retail trading activity shows signs of cooling. However, with the stock now deeply oversold and trading significantly below analyst price targets, investors will be watching for any signs of stabilization in cryptocurrency markets or a resurgence in retail trading interest.