Investment bank Compass Point rated Robinhood Markets Inc. a buy, setting a price target of $61 in initiating coverage of the trading platform in a note Wednesday that highlighted increased average revenue for its 12 million crypto users alongside an improving U.S. regulatory environment."
Compass Point analysts estimated that Robinhood had an opportunity to generate $665 million from cross-selling to existing U.S. customers, including the potential to generate $150 million "from staking alone."
"HOOD's crypto business has underearned for its size after taking a cautious approach to U.S. product expansion," Compass wrote, noting that the company's crypto revenue was "just 19% of exchange giant Coinbase's non-interest revenue.
Robinhood Debuts March Madness Prediction Markets as Event Derivatives Gain Traction in US
Robinhood has launched a prediction market that will allow users to bet on this year's March Madness basketball tournament—the latest sign event derivatives are gaining traction in the U.S. despite ongoing regulatory challenges. Beginning Monday, Robinhood users can place wagers on the National Collegiate Athletic Association's March Madness tournament, which runs from mid-March to early April. The prediction markets are powered by Kalshi, a startup that fought and won its legal battle agains...
After already developing extensive infrastructure for non-U.S. users, HOOD can launch additional crypto services in the U.S. with limited additional investment," the analysts wrote.
Compass' coverage reflects traditional finance's surging interest in digital assets as more investors consider these assets.
On Monday, the broker Bernstein started covering Coinbase, setting a nearly 70% upside on the stock. Bernstein cited a more crypto-friendly environment with the election of U.S. President Donald Trump.
Menlo Park, California-based Robinhood closed up more than 6% to trade just over $42 per share on Wednesday amid wider gains in crypto stocks and other risk-on assets.
The share price has been hammered in recent weeks amid mounting fears about a trade war that could ignite a period of stagflation–sluggish economic growth and rising prices.
Robinhood's Crypto Revenue Soars 700% in Q4, Driving Record Profit
Robinhood Markets reported a 700% surge in cryptocurrency trading revenue in the fourth quarter, helping the retail brokerage post record profitability as digital asset volumes rebounded. Crypto revenue reached $358 million, up from $45 million a year earlier, accounting for more than one-third of total transaction-based revenue, which rose over 200% to $672 million. The trading boom pushed total Q4 revenue up 115% year-over-year to $1.01 billion, while net income soared more than tenfold to $9...
Robinhood has also enjoyed recent tailwinds. Fourth-quarter crypto trading revenue skyrocketed 700% skyrocketed, pushing overall revenue for the period up 115% year-over-year, the company reported in February.
Later in the month, the U.S. Securities and Exchange Commission said that it was closing an investigation into Robinhood's crypto arm without seeking an enforcement action.
Earlier this week, the company launched a prediction market that will allow users to bet on this year's NCAA basketball tournament, called March Madness.
Compass wrote that Robinhood's "crypto users provide attractive liquidity for institutional traders."
Edited by Sebastian Sinclair
