In a recent research report, prominent brokerage firm Bernstein has identified Robinhood (HOOD) as the top potential beneficiary of a shift towards cryptocurrency deregulation in the United States. The firm’s bullish outlook on the popular trading platform comes amid expectations of a more crypto-friendly Securities and Exchange Commission (SEC) under a potential Donald Trump administration.
Bernstein Raises Robinhood Price Target to $51
Expressing confidence in Robinhood’s future prospects, Bernstein has significantly raised its price target for the company’s stock from $30 to $51. The brokerage maintained its “outperform” rating on the shares, which climbed more than 2% to around $36 in early trading following the report’s release.
Analysts at Bernstein, led by Gautam Chhugani, highlighted Robinhood’s current “regulatory-constrained” crypto business, noting that the platform has only listed 19 cryptocurrency tokens to date. They also pointed out that the California-based company has not generated any revenue from staking, lending, derivatives, or stablecoins thus far.
“But with a potentially new and crypto-friendly SEC, this LOOKS set to change, and we expect HOOD to be the biggest beneficiary of the crypto regulatory tailwinds.”
Bernstein analysts, led by Gautam Chhugani
Expanded Crypto Offerings and Revenue Potential
According to the report, Robinhood’s trading app is well-positioned to generate higher revenues by listing new tokens and introducing fresh crypto product ranges. By targeting a broader opportunity set, the platform can tap into a larger market and expand its user base.
The recent additions of Solana (SOL), PEPE (PEPE), Cardano (ADA), and XRP (XRP) to Robinhood’s platform, following Trump’s win in the U.S. presidential election, bring the total number of cryptocurrencies available for trading to U.S. customers to 19. This move signals the company’s readiness to capitalize on the anticipated crypto-friendly environment.
Bitstamp Acquisition to Bolster Value-Added Crypto Services
Bernstein’s analysts believe that Robinhood’s acquisition of Bitstamp, a European cryptocurrency exchange, will further enhance the platform’s ability to offer value-added crypto services. The combined entity is expected to provide staking, stablecoin access, and lending, which could significantly boost Robinhood’s revenue streams and overall market presence.
“The acquisition of Bitstamp and its European platform by Robinhood is expected to ‘further bolster value-added crypto services’, the authors wrote, as exchanges can offer staking, access to stablecoins, and lending.”
Bernstein report excerpt
Potential Impact of a Crypto-Friendly SEC under Trump
The anticipated shift towards a more crypto-friendly regulatory environment under a potential Trump administration is a key factor driving Bernstein’s optimistic outlook for Robinhood. With the expectation of a new, pro-crypto SEC, the brokerage firm believes that Robinhood will be the biggest beneficiary of the changing regulatory landscape.
A source familiar with the matter suggested that a Trump-appointed SEC could potentially:
- Provide clearer guidelines for cryptocurrency listings and trading
- Ease restrictions on staking, lending, and derivatives
- Foster a more innovation-friendly environment for crypto-related businesses
Such developments would likely create a more favorable operating environment for platforms like Robinhood, enabling them to expand their crypto offerings and attract a wider user base.
The Road Ahead for Robinhood
As Robinhood navigates the evolving regulatory landscape and positions itself to capitalize on the potential crypto boom, investors and industry observers will be closely watching the company’s strategic moves. The platform’s ability to leverage its user-friendly interface, expand its crypto offerings, and integrate value-added services through the Bitstamp acquisition will be critical factors in determining its success.
While the future remains uncertain, Bernstein’s bullish stance on Robinhood reflects a growing sentiment that the platform is well-positioned to benefit from the potential crypto deregulation under a Trump administration. As the regulatory environment evolves and the cryptocurrency market matures, Robinhood’s journey is set to be an intriguing one, with the potential for significant growth and market dominance.
