Tom Lee Suggests Avoiding Robinhood (HOOD) Stock in 2026 – What's the Reason?

Wall Street analyst Tom Lee is known for rarely missing big calls in the crypto market, but his latest recommendation on Robinhood stock has actually been contradicted by his own team.

Fundstrat updated its list of top stock picks for 2026 this week, and Robinhood (HOOD) landed in the category of stocks to avoid — even though the company's second‑quarter earnings set records across the board.

Reaction came swiftly. Fundstrat's own investment committee immediately spoke out against the boss's view, arguing that Robinhood's business performance is actually at its peak. This debate makes the analysis of HOOD stock particularly worth a closer look.

Key Takeaways

• Tom Lee (Fundstrat) flags Robinhood (HOOD) stock as one to avoid in 2026, while adding JPMorgan and Arista Networks to his picks.
• Fundstrat's own investment committee disputes this recommendation, highlighting Robinhood's 32% YoY revenue growth and 48% EPS increase in Q2 2026.
• Lee remains bullish on Ethereum and Robinhood Chain, separating his view on HOOD stock from the blockchain infrastructure built by Robinhood.

Tom Lee Updates His Core Stock Picks for 2026

Fundstrat updated its list of core stock ideas for 2026 on August 19, 2026. Tom Lee added two new names to his favorites: JPMorgan and Arista Networks.

On the other hand, he removed Robinhood from the list of worthy holdings and instead placed it in the category of stocks to avoid throughout the year.

This decision quickly drew a response from his internal team. According to a CNBC report cited by Yahoo Finance from BeInCrypto, Kevin Simpson — founder and chief investment officer of Capital Wealth Planning — openly voiced his disagreement on CNBC with a blunt statement: "I couldn't disagree more."

Also Read: 10 Free Bitcoin Mining and Faucet Sites in 2026 – Which Are Legit?

Simpson argued that Robinhood has transformed far beyond its pandemic‑era trading app reputation. He highlighted the company's acquisition of a registered investment adviser and its build‑out of an in‑house custody platform as evidence that Robinhood has moved upmarket.

Brenda Vingiello, chief investment officer at Sand Hill Global Advisors, also did not fully agree with Lee's view — though she herself had exited her HOOD position in June, citing weakening price momentum at the time.

Vingiello still believes a crypto market recovery could lift the stock again, given that Robinhood's sentiment remains closely tied to digital asset moves.

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Robinhood's Financial Performance Actually Hit Records in Q2 2026

What makes Lee's recommendation controversial is that Q2 2026 data actually shows Robinhood at its best. Revenue rose 32% year‑on‑year to a record US$1.31 billion. Diluted earnings per share (EPS) jumped 48% to US$0.62 — far exceeding analyst expectations. Net deposits also hit a record US$22 billion, up 28% year‑on‑year.

However, there is one weak spot that may be a hidden reason behind Lee's caution: Robinhood's own crypto trading business shrank sharply. Revenue from crypto transactions plummeted 38% year‑on‑year to just US$100 million in the same quarter, according to company‑disclosed data.

This decline indicates a shift in user preferences from spot trading to other products offered by Robinhood.

The contrast between strong core business performance and weakening crypto business is what makes the outlook for Robinhood stock a matter of debate. HOOD shares traded around US$96 on August 19, 2026, with a market capitalization of about US$86 billion.

Also Read: Nvidia’s $500 Billion AI Funding – Will AI Crypto Tokens Benefit?

Why Does Tom Lee Remain Bullish on Ethereum and Robinhood Chain?

Lee's skepticism toward HOOD stock does not extend to the blockchain ecosystem built by Robinhood.

As Chairman of BitMine Immersion Technologies — the world's largest Ethereum treasury, holding about 5.77 million ETH or 4.8% of total supply — Lee has called Robinhood Chain one of the biggest crypto success stories of 2026.

Robinhood Chain itself is an Arbitrum‑based Layer 2 network launched on July 1, 2026. According to Lee, this network has the potential to connect Robinhood's 27 million customers with Ethereum‑based services, since all transaction fees on this network are denominated in ETH and final settlement occurs on the Ethereum mainnet.

"Robinhood's 27 million users are paying crypto fees denominated in ETH," Lee said, as quoted by crypto.news.

Also Read: Popular Tokenized Stocks in 2026: Technology Stocks Become Investor Favorites

That said, this claim needs to be viewed in a fuller context. The 27 million figure refers to Robinhood's total customer base, not the number of active users who have actually transacted on Robinhood Chain.

The network's cumulative DEX volume approached US$9 billion in the first three weeks, but more than 80% of it was dominated by memecoin trading — not tokenized stocks or real‑world assets that are the main focus of this product.

Total value locked (TVL) on the network as of August 19, 2026, stood above US$550 million according to DefiLlama, with the USDG stablecoin accounting for more than half of that value.

There is also a limitation that has not been widely highlighted: tokenized stock products and perpetual futures on Robinhood Chain are not yet available to users in the United States, Canada, and the UK — even though the US is Robinhood's largest customer base.

Robinhood also waived gas fees for the first 90 days after launch, so some of this early activity could subside once that incentive ends.

Also Read: Tokenized Stocks vs Traditional Stocks: Definitions, Differences, and How to Buy

Conclusion

Tom Lee's recommendation to avoid Robinhood stock appears contradictory at first glance, given that the company's Q2 2026 performance set records across several metrics.

But upon deeper analysis, Lee's position is actually consistent: he separates his view of Robinhood as a stock entity from Robinhood Chain as a blockchain infrastructure that benefits the Ethereum ecosystem — an asset that is also a major interest of BitMine, the company he chairs.

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FAQ

Who is Tom Lee and why is his recommendation important to crypto investors? 

Tom Lee is Head of Research at Fundstrat and Chairman of BitMine Immersion Technologies, one of the world's largest Ethereum treasuries. His recommendations are often closely followed because he was one of the first Wall Street strategists to officially cover Bitcoin.

Why does Tom Lee advise investors to avoid Robinhood stock? 

Lee did not explicitly detail the technical reasons in his 2026 stock list update, but Robinhood's shrinking crypto business — down 38% year‑on‑year — is believed to be one factor behind his caution.

Is Robinhood's financial performance really that bad? 

No. Robinhood actually set records in Q2 2026, with revenue up 32% YoY and EPS up 48%, even though revenue from its specific crypto business declined significantly.

What is Robinhood Chain and how is it connected to Ethereum? 

Robinhood Chain is an Arbitrum‑based Layer 2 network that uses ETH as its gas token and settles transactions on the Ethereum mainnet, so activity on this network also supports ETH demand.

Should Tom Lee's recommendation on HOOD stock be taken as the final word? 

Not necessarily. Even Fundstrat's own investment committee publicly disagreed with this view, citing strengthening business fundamentals at Robinhood.