Robinhood Receives 'Buy' Rating With 50% Upside as Compass Point Starts Coverage

Robinhood Receives 'Buy' Rating With 50% Upside as Compass Point Starts Coverage

  • 20.03.2025 01:11
  • decrypt.co
  • Keywords: Robinhood, Compass Point

Robinhood received a 'Buy' rating from Compass Point, citing growth in its crypto business and cross-selling potential. The investment bank highlighted a $665 million revenue opportunity and noted a 700% surge in Q4 crypto trading revenue, setting a $61 price target.

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Estimated market influence

Robinhood Markets Inc.

Positivesentiment_satisfied
Analyst rating: N/A

The article discusses Robinhood's crypto business growth, increased revenue, and positive regulatory environment.

Compass Point

Positivesentiment_satisfied
Analyst rating: N/A

Initiated coverage with a 'Buy' rating and price target, highlighting Robinhood's potential.

Context

Robinhood Analysis: Buy Rating with 50% Upside Potential

  • Buy Rating and Price Target: Compass Point assigns a "Buy" rating to Robinhood Markets Inc. with a price target of $61.

  • Crypto Business Growth:

    • Cross-Selling Potential: Estimated $665 million in revenue from cross-selling to U.S. customers, including $150 million from staking alone.
    • Revenue Comparison: Robinhood's crypto revenue is 19% of Coinbase's non-interest revenue.

  • March Madness Prediction Market:

    • Launched a prediction market for the NCAA basketball tournament, powered by Kalshi, despite regulatory challenges.

  • Q4 Financial Performance:

    • Crypto Revenue Surge: 700% year-over-year increase to $358 million.
    • Total Transaction-Based Revenue: Over 200% growth to $672 million.
    • Overall Q4 Revenue: 115% YoY increase to $1.01 billion.
    • Net Income: More than tenfold year-over-year surge.

  • Regulatory Tailwinds:

    • U.S. Securities and Exchange Commission closed an investigation into Robinhood's crypto arm without enforcement action.

  • Competitive Dynamics:

    • Robinhood's cautious approach to U.S. product expansion has led to underperformance relative to Coinbase, but presents growth opportunities.

  • Strategic Considerations:

    • Expansion into event derivatives (e.g., March Madness prediction market) and staking services.
    • Institutional liquidity provided by Robinhood's crypto users.

  • Long-Term Implications:

    • Potential for increased market share in retail trading and crypto.
    • Regulatory clarity could further boost growth.