On Thursday, Robinhood Markets (NASDAQ:HOOD) received an Outperform rating from Bernstein, with a new price target set at $30.00. The firm's coverage initiation is based on the anticipation of a significant upswing in the cryptocurrency market over the next two years, with projections of the market capitalization reaching $7.5 trillion, a substantial increase from the current $2.6 trillion.
The firm expects Robinhood to capitalize on this surge, predicting a ninefold increase in the company's crypto revenues, which is five times higher than the consensus. This optimistic forecast places Bernstein's revenue expectations for Robinhood in 2025 at 54% above the current consensus and triples the consensus estimates for earnings in the same year.
According to the firm, Robinhood's comprehensive crypto services, offered within a regulated brokerage platform, positions it advantageously in the market. Robinhood's user base consists of 11 million active traders who are predominantly young, active, and prefer to direct their own trades. This demographic is seen as well-suited for trading cryptocurrencies.
The competitive rates offered by Robinhood are also highlighted as a strength, with the platform charging 35 basis points compared to the 150 basis points charged by crypto exchanges like Coinbase (NASDAQ:COIN). Bernstein notes that traditional brokerage platforms, such as Schwab, have been hesitant to offer crypto trading options and typically cater to an older demographic more focused on savings.
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