Despite seeing a surge in its crypto trading volume over the years, Robinhood (HOOD) maintains a rather limited presence in the crptocurrency market. At the end of 2024, it was not even one of the top-10 largest centralized exchanges by market share. Rival Coinbase (COIN) claimed the No. 6 spot with market share of just 6.5%.
That may soon be changing. Citing the crypto-friendly administration of President Donald Trump, Robinhood CFO Jason Warnick revealed that Robinhood is expanding its crypto services by venturing into areas like tokenization.
About Robinhood Stock
Founded in 2013, Robinhood (HOOD) provides an electronic trading platform accessible via a mobile app that facilitates commission-free trades of stocks, exchange-traded funds, and cryptocurrencies. The company's mission is to “provide everyone with access to the financial markets, not just the wealthy,” eliminating commissions and minimum account balances.
Valued at a market capitalization of $40.6 billion, HOOD stock is up nearly 30% in the year to date.
With the CFO stating that Robinhood wants its crypto business to be “global and as big as possible and as fast as we can do it responsibly,” can Robinhood leverage Trump-driven crypto momentum?
Robinhood Posts a Blowout Q4
Robinhood reported a significant beat on both the revenue and earnings front for the most recent quarter. Net revenues increased by 115% from the previous year to $1.01 billion, supported by a 200% yearly jump in the core transaction revenues to $672 million. Cryptocurrency transaction revenue increased by 700% in the same period to $358 million, making up more than a third of its total revenues.
Consequently, earnings went up to $1.01 per share from $0.03 per share in the year-ago period.
Key operational metrics such as funded customers (25.2 million, +8% YOY) and average revenue per user ($164, +102% YOY) aided the overall uptick in earnings as Robinhood’s assets under custody surged by 88% from the prior year to $193 billion.
However, the company reported a net cash outflow from operating activities of $1.4 billion versus an inflow of $960 million in the prior year. Overall, the company exited the December quarter with a cash balance of $4.3 billion with no debt on its books.
Strategic Drivers
The North American crypto market is the largest globally and is poised to grow at a CAGR of 11.1% between 2021 and 2028. Another report claims that the revenue of the U.S. cryptocurrency market will reach $2.72 billion by 2030.
Robinhood is positioning itself to capture a significant share of this market through a series of strategic moves. Management has outlined plans to broaden its cryptocurrency offerings, placing emphasis on tokenizing real-world assets, including equities and private investments, to harness blockchain technology. The acquisition of Bitstamp for $200 million in cash aligns with the company’s long-term objectives and is expected to solidify its standing as a dominant player in the cryptocurrency sector.
In addition, the company expanded its trading portfolio in the December quarter, introducing new high-volume digital assets like Solana (SOLUSD), XRP (XRPUSD), and Cardano (ADAUSD). This expansion strategy is aimed at increasing market share within the fast-evolving crypto trading landscape.
Meanwhile, in a recent discussion with the Wall Street Journal, Robinhood’s CFO highlighted the company’s growing interest in stablecoins — cryptocurrencies pegged to traditional assets like the U.S. dollar. He noted that while yield generation on stablecoins is not yet a widespread practice, it represents a significant future opportunity, signaling Robinhood’s intent to deepen its involvement in this segment.
The company has also been leveraging its Robinhood Gold subscription program as a key promotional driver. The platform has experienced an 86% growth in Gold subscribers, with adoption continuing to rise.
In October, Robinhood introduced Robinhood Legend, a trading platform designed to attract professional traders and directly compete with established brokerages like Interactive Brokers (IBKR).
Further broadening its reach, Robinhood recently ventured into political event trading with the launch of contracts tied to the U.S. presidential election. In this segment alone, the company facilitated the trading of over 400 million contracts, positioning itself as a potential disruptor to online betting platforms like Polymarket.
Through its technology-driven model, Robinhood continues to outpace competitors in innovation, capitalizing on major secular shifts to strengthen its foothold in the evolving retail investing landscape.
Analyst Opinion on HOOD Stock
Overall, analysts have deemed the stock a “Moderate Buy” with a mean target price of $63.59 which denotes upside potential of about 32% from current levels. Out of 19 analysts covering the stock, 11 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and six have a “Hold” rating.
