Robinhood is back to 2021! The meme stock craze is reignited, but analysts are calling to "sell".

The bubble and "meme" stocks are back! Robinhood (HOOD) has once again become the focus of retail investors, with its stock price soaring 40% since June, reminiscent of the meme stock frenzy of 2021. However, amid the heightened market sentiment, some analysts have chosen to go against the trend by downgrading their ratings to "sell," citing overvaluation and cyclical growth risks.

Meme Stock Sentiment Returns: HOOD Rises Again

(Source: Trading View)

Robinhood, as the commission-free trading platform most familiar to retail investors, gained immense popularity during the meme stock frenzy of 2021, particularly with GameStop. Although the volatility at that time temporarily harmed its reputation, over time and with product innovation, HOOD successfully reshaped its image.

The number of gold members continues to grow, indicating a rebound in user activity.

Recently, stock prices have surged, and the market is clearly experiencing a "fear of missing out" (FOMO) sentiment.

Financial Report Highlights: Revenue and Profit Both Increase

(Source: Robinhood)

According to the Q2 2025 financial report:

Net income increased by 45% year-on-year to 989 million USD, primarily driven by the growth in trading-related revenue.

Adjusted EBITDA profit margin increased by 82% year-on-year, reaching 56%.

Cash reserves of $4.3 billion, no corporate debt, but cash balance continues to decline due to stock buybacks and merger activities.

This season, a total of 124 million USD in stocks were repurchased, with a cumulative repurchase of 700 million USD over the past 12 months.

The management also emphasized the potential of "stock tokens," stating that they could have an impact on the stock market similar to that of stablecoins on fiat currencies, and hinted at the launch of private banking products.

Valuation Concerns: Excessive Premium, Cyclical Risks

Although the fundamentals are strong, HOOD's current valuation is extremely high:

The price-to-sales ratio (P/S) reached as high as 23 times, far exceeding Charles Schwab (SCHW) at 8 times and Interactive Brokers (IBKR) at 5 times.

Transaction-based income is highly cyclical, peaking in 2021 before plummeting in 2022, and only slowly recovering in 2023.

Analysts are concerned that the expected 19% growth rate in the market for 2026 may be overly optimistic, and the pressure from competitors will continue to increase.

Investment Conclusion: Strong Fundamentals, but Stock Price May Face Pressure

HOOD's revenue and profit performance in recent years has indeed outperformed market expectations and has solidified its position in the retail brokerage market. However, the high valuation and the cyclicality of trading income mean that there is a downside risk to the stock price.

Analyst conclusion: "Even if Robinhood continues to grow rapidly, its valuation premium may ultimately revert to be in line with its peers, and the stock price will face immense pressure."

Therefore, even though the fundamentals seem solid, some professional institutions have still downgraded the rating of HOOD to "Sell."

Conclusion

The story of Robinhood once again reminds investors that there may be a huge gap between market sentiment and fundamentals. The meme stock frenzy of 2021 may have returned, but this time, investors need to be more cautious and avoid buying at emotional peaks. For more in-depth analysis of the US stock and crypto markets, please follow the official Gate platform.