TLDR
- Compass Point has endorsed Robinhood with a 'Buy' rating and a price target of $61, highlighting the growth potential within its crypto division.
- Robinhood’s cryptocurrency revenue in the fourth quarter rose by an astonishing 700%, reaching $358 million and representing about a third of its transaction-based income.
- The firm could potentially rake in $665 million via cross-selling to its existing clientele, including $150 million anticipated solely from staking ventures.
- Analysts observe a shift toward more crypto-friendly regulations during the Trump administration.
- According to analysts, HOOD stocks boast an average potential increase of 78.3%, earning a consensus rating of 'Moderate Buy'.
Robinhood Markets Inc. (NASDAQ:HOOD) is witnessing a surge in its cryptocurrency sector, bolstering the well-known trading app's profitability as digital currency trade volumes bounce back. Attracting attention from Wall Street, analysts see room for expanding crypto assets offerings.
In coverage initiation by Compass Point, Robinhood secures a 'Buy' rating with a $61 price goal, positing a 50% upside from its current market valuation. With a thriving U.S. regulatory environment, Robinhood reports increased revenue from its 12 million crypto customers.
Compass Point analysts foresee Robinhood capable of generating $665 million from cross-selling appeals to U.S. users. They detail an estimated $150 million from staking alone, as conveyed in their recent Wednesday report.
HOOD's crypto business appeared under-profitable, compensating for its magnitude by cautiously approaching U.S. expansion, according to the bank. They noted that the company achieved just 19% of what the large exchange Coinbase earns from non-interest revenues, highlighting untapped potential.
The groundwork developed for users outside the U.S. is extensive, and Compass analysts suggest that Robinhood could start additional crypto services stateside with minimal further investment, fueling their positive view on the stock.
Robinhood has reaped benefits from more active crypto trading. Fourth-quarter cryptocurrency revenue soared 700%, climbing from $45 million to $358 million year-on-year. This accounted for over a third of Robinhood’s transaction-based income, which scaled upwards by over 200% to $672 million.
Robinhood's crypto trading boom boosted its total Q4 revenue by 115% as compared to last year, exceeding $1 billion. Net income saw more than tenfold growth, indicating crypto as a pivotal factor in its financial success.
As of February, U.S. Securities and Exchange Commission's conclusion of its investigation into Robinhood’s crypto division without pursuing enforcement action has provided regulatory certainty clearing the ambiguity surrounding their digital asset business.
Robinhood’s Strategy of Diversification
With traditional finance increasingly intrigued by digital assets, Robinhood’s upward trend aligns. Just this week, broker Bernstein expressed similar sentiments with nearly a 70% stock climb predicted for Coinbase, emphasizing a favorable setup with Trump's presidency.
Deutsche Bank analyst Brian Bedell maintains a 'Buy' outlook on Robinhood, labeling it a ripe buying opportunity due to its robust trading, particularly in equities and options, with crypto volumes swelling over 400% year-on-year to $71 billion in Q4 2024.
BofA Securities stays optimistic on Robinhood’s prospects, reiterating a 'Buy' rating with a price projection of $65.00, emphasizing increased retail activity and notable organic growth. This expansion is reputed globally in both self-directed retail and cryptocurrency fields.
Recently experiencing over a 6% surge, Robinhood's stock trades above $42 per share, indicative of gains across crypto stocks and other high-risk assets. Analysts predict an average stock appreciation of roughly 78.3%.
In a bid to broaden its financial avenues, Robinhood has launched diverse offerings beyond typical stock trading. Among the latest is a betting market for the NCAA’s March Madness, illustrating how Robinhood is diversifying revenue streams.
Artisan Partners noted in its Q4 2024 letter that Robinhood, a trading favorite among millennials with around 25 million accounts, is poised to expand service offerings as its user demographic evolves and accumulates wealth.
MarketBeat data shows Robinhood's stock holding a 'Moderate Buy' consensus rating, with an average price target of $61.29. Five analysts have advised holding the stock, while thirteen advocate for its purchase.
Robinhood presently boasts a market cap of approximately $37.90 billion, with a price-to-earnings ratio of 27.26. The stock demonstrates commendable performance, maintaining an average price of $48.86 over 50 days and $36.90 over 200 days.
Operating within the U.S., Robinhood provides a platform for investments in stocks, ETFs, options, gold, and cryptocurrencies. The platform features fractional trading, scheduled investments, securities lending, margin usage, and swift withdrawals.
