HOOD: Bull Run Is Overextended and a Correction Is Imminent

I believe the recent euphoria surrounding Robinhood Markets (HOOD) drove the stock to valuations demanding perfection. Investors ignored mounting headwinds in favor of momentum. This optimism creates a dangerous setup ahead of the November operating data release. I anticipate a sharp pullback when the reality of cooling retail activity meets an inflated share price.

The Valuation Disconnect

Robinhood shares recently touched all-time highs near $153. The stock trades at a premium assuming uninterrupted growth in funded customers and trading volumes. This assumption ignores the cyclical nature of retail engagement. I attribute the price-to-earnings expansion in late 2025 to a resurgence in crypto sentiment and aggressive retail speculation. Those drivers are fading.

Paying over 30x forward EBITDA for a cyclical brokerage business leaves no margin for error. The market prices HOOD as a high-growth SaaS company. It is a transactional exchange heavily dependent on market volatility.

The November Metrics Risk

I expect the November 2025 Monthly Metrics report to disappoint the market. October set an impossibly high bar with record volumes driven by election volatility and a crypto surge. November offered no such catalysts.

My proprietary tracking of crypto exchange volume and app engagement suggests a significant deceleration. I estimate equity trading volumes might show a month-over-month decline exceeding 20% to 30%. Crypto volumes likely retreated as Bitcoin consolidated. The market expects a continuation of the October trend. It will likely receive a sharp contraction instead. When these numbers drop, the momentum narrative will fracture.

Insider Activity Signals Caution

Corporate insiders are voting with their feet. I observed consistent selling from key executives throughout November. Chief Legal Officer Daniel Gallagher and others executed significant sales at prices between $112 and $145. Executives sell for many reasons. The clustering of sales near all-time highs suggests management sees full valuation. They are liquidating shares while retail investors continue to buy at the top.

Technical Exhaustion

The technical picture confirms my fundamental thesis. The stock showed bearish divergence on the RSI (Relative Strength Index) for weeks. Price made higher highs in October and November while momentum indicators made lower highs. This exhaustion pattern often precedes a reversal. The $110 level acts as weak support. A break below that level might trigger a cascade of stop-loss selling from late entrants.

Investment Verdict

The risk-reward ratio for Robinhood is heavily skewed to the downside at current levels. The company faces a difficult comparable against its own October performance. I view the upcoming monthly metrics as a negative catalyst that will reset expectations.

Investors should lock in gains or initiate protective put options. The smart money started to exit. You should follow their lead before the data confirms the slowdown.

Rating: HOLD
(SELL Price Target: $95.00)

If you prefer getting out early, I’d sell. I personally just sold my holding at a 600+% gain.