Bernstein sees upside in Robinhood stock as crypto business expansion looms Investing.com

On Tuesday, Bernstein analysts reaffirmed their positive stance on Robinhood markets (NASDAQ: ), maintains an Outperform rating and a $51.00 price target. The brokerage considers the stock the “best idea for 2025” within its Global Digital Assets coverage. Currently trading at $42.10 with a market capitalization of $37.1 billion, Robinhood’s stock has seen a significant rise, delivering an impressive 259% return over the past year.

Analysts believe the momentum is likely to continue through 2025, driven by robust revenue growth of 36% and increasing profitability.According to the InvestingPro analysis, Robinhood maintains a “Good” financial health score, with particularly strong momentum metrics. InvestingPro subscribers have access to 12 additional investment tips and extensive financial analysis for HOOD.

Robinhood has taken a cautious approach in its cryptocurrency offerings, listing approximately 20 tokens. This conservative strategy is attributed to the strict stance of the current SEC team on the classification of tokens as securities. This approach contrasts with its competitors, such as Coinbase (NASDAQ: ), which lists over 250 tokens.

Analysts expect the regulatory environment to become more favorable to cryptocurrencies under a Trump administration, leading to clearer rules for classifying digital assets. This move could enable Robinhood to expand its token listings and increase its market share in spot crypto trading, potentially building on its strong 86% gross margin.

The company recently settled with the SEC, agreeing to pay $45 million to resolve regulatory issues that arose in 2018. The settlement amount was fully vested in the previous year, 2023. Bernstein’s analysts remain bullish on Robinhood’s outlook, citing the settlement as a resolution to past regulatory challenges and a potential catalyst for future growth.

The positive outlook for Robinhood is further supported by expectations of a pro-crypto stance from the SEC, which could provide a more conducive environment for the company’s crypto business expansion. With the expectation of a more favorable regulatory landscape and the company’s strong performance in the previous year, Robinhood is positioned to potentially capture a larger share of the crypto trading market. Analysts’ targets range from $29 to $60, with a consensus recommendation leaning towards Buy.

The $51 price target reflects confidence in Robinhood’s ability to capitalize on these opportunities and continue its upward trajectory in profitability and market presence. Gain deeper insight into Robinhood’s valuation and growth prospects with a comprehensive Pro Research report, exclusively available at InvestingPro, along with advanced financial metrics and expert analysis.

In other recent news, Robinhood has settled charges by the US Securities and Exchange Commission (SEC) and agreed to pay $45 million in civil penalties.

The settlement addresses allegations of multiple violations in Robinhood’s brokerage operations, including inaccuracies in reporting trading activity and inadequate measures to protect customer information. In further developments, Robinhood’s stock has been upgraded by JPMorgan analysts from underweight to neutral. This follows the company’s successful diversification of its operations and strong financial performance, with revenue increasing by 35.7% and earnings per share of share of $0.60 over the past twelve months.

Robinhood has also introduced several new products aimed at attracting more engaged and active users. Despite this, the company’s average account size remains smaller compared to its peers, leading to questions about its long-term profitability potential. Other firms such as Piper Sandler and Goldman Sachs have maintained positive ratings on Robinhood, citing strong trading volume and revenue growth.

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