In a stunning display of the power of cryptocurrency trading, popular investing app Robinhood blasted past Wall Street’s expectations in its latest quarterly earnings report. Shares of Robinhood (HOOD) surged as much as 13% in pre-market trading Thursday after the company revealed that crypto transaction revenue hit a record high in Q4, fueling an earnings beat that left analysts scrambling to raise their price targets.
The centerpiece of Robinhood’s blockbuster quarter was a massive $358 million in crypto trading revenue – the highest contribution from digital assets in the company’s history, according to a research note from JPMorgan. This crypto boom powered a 115% year-over-year increase in total revenue to $1.01 billion, easily surpassing the analyst consensus estimate of $945.8 million.
Crypto revenue normally contributes 10%-20% of total revenue. The 46% jump in total cryptocurrency market cap in the period and the increase in Robinhood notional volumes, which were 393% higher quarter-on-quarter, fueled the revenue beat.
– JPMorgan research report
Crypto Drives Analyst Upgrades
The stellar earnings prompted a flurry of price target hikes from major Wall Street firms:
- JPMorgan raised its target to $45 from $39
- Citi lifted its objective to $60 from $45
- Bernstein more than doubled its target to $105 from $51
All three firms maintained their existing ratings on Robinhood stock, with JPMorgan and Citi at neutral and Bernstein at outperform. However, the substantial price target increases reflect growing confidence in the company’s ability to harness the explosive growth in retail crypto trading.
Big Plans for Crypto Business
Building on its crypto success, Robinhood has ambitious plans to expand its digital asset offerings. The company intends to:
- Add more tokens
- Strengthen its wallet
- Integrate exchange routing
- Acquire crypto platform Bitstamp
- Explore asset tokenization
With these initiatives in the pipeline and continued “crypto market tailwinds”, Citi noted that Robinhood shares are likely to find support if the current momentum persists. However, the bank cautioned that investors should still expect volatility and wait for a “more reasonable entry point” before buying the stock.
Bernstein’s Top Digital Asset Pick
Among major brokerages reporting on Robinhood, Bernstein struck the most bullish tone. The firm reiterated Robinhood as its top pick in the digital asset space and said it expects continued strength in Q1 driven by “crypto volatility and a sustained price cycle.”
With crypto trading emerging as a major growth engine for Robinhood alongside its core stock and options offerings, the company now finds itself well-positioned to benefit from the mainstreaming of digital assets. As more and more retail investors dip their toes into cryptocurrencies, Robinhood’s user-friendly platform and crypto focus make it a natural on-ramp.
Key Takeaways
- Record crypto trading revenue powered Robinhood’s Q4 earnings beat
- Crypto boom fueled 200% jump in transaction revenue and 115% total revenue growth
- Wall Street firms hike price targets on the stock amid optimism about crypto business
- Robinhood plans to add tokens, enhance wallet, and explore acquisitions and tokenization
- Continued “crypto tailwinds” expected to support the shares near-term
With its sights set on becoming a leading player in the retail crypto boom, all eyes will be on Robinhood to see if it can maintain its digital asset momentum. If the company’s Q4 blowout is any indication, there’s plenty of room for this crypto-fueled rocket to keep rising.
