Robinhood Markets (NASDAQ:HOOD) popped nearly 6% today, with analysts starting to see green shoots for the retail trading platform's future. Needham's John Todaro upgraded Robinhood to buy with a $40 price targetabout 24% higher than Friday's closeand called the stock a prime beneficiary of Trump-era regulatory shifts, especially in the crypto space. After climbing a jaw-dropping 300% in the past twelve months, the company is banking on new retail-friendly crypto products to cement its position as a leader in trading equities and options. Piper Sandler analyst Patrick Moley jumped on the bullish bandwagon, upping his target to $36, predicting more upside from Bitcoin's surge and the anticipated 2025 halving event.

• Warning! GuruFocus has detected 6 Warning Sign with HOOD.

But before you dive headfirst into HOOD, let's zoom out. Robinhood's user base has taken a major hitmonthly active users have plummeted by 48% since 2021, landing at a 2024 low of 11 million in Q3. Transaction revenue is also trailing its pandemic-era highs, and interest incomethe company's saving grace during the Fed's rate-hiking spreeis starting to wobble. With rates getting slashed, Robinhood's $274 million in Q3 net interest revenue could face even steeper declines. Toss in a bloated trailing price-to-sales ratio of nearly 12, way above its 6-year average price-to-sales ratio of 8, and you've got a stock that's looking a bit frothy.

So, is Robinhood a screaming buy or just a risky FOMO trap? If you believe in a retail-driven bull market and the power of fresh crypto innovation, HOOD might still have legs. But with shrinking users, revenue headwinds, and a sky-high valuation, it's also a stock that could leave you chasing gains that have already sailed. As always, tread carefullywhat's dazzling today can sometimes lose its shine tomorrow.

This article first appeared on GuruFocus.