Robinhood Markets Inc. HOOD is positioned for exceptional growth, driven by its strategic embrace of cryptocurrency, according to a new analysis from Bernstein.

What Happened: The financial services firm upgraded its price target for HOOD to $105, citing the company’s Q4 earnings, which were fueled by a surge in crypto-related revenue.

Bernstein has also named Robinhood as “best idea for 2025.”

The analysis highlights that HOOD's impressive Q4 performance marked a turning point, with total revenue reaching $1 billion for the first time.

Cryptocurrency revenue soared by 487% compared to the previous quarter and 733% compared to the same period last year.

Bernstein notes that the past quarter, as the last quarter of the election year, was highly bullish for crypto related revenues.

Bernstein anticipates that this growth trajectory will continue, projecting substantial increases in both revenue and earnings per share (EPS) over the next two years.

The firm estimates a ~35% EPS growth for 2025E (65% above consensus) and ~47% EPS growth for 2026E (114% above consensus).

Also Read: Tether May Need To Sell Bitcoin To Comply With US Laws, JPMorgan Warns

Bernstein identifies several factors driving its optimistic outlook. These include:

1. Crypto Market Growth: Bernstein anticipates a continued bull market in cryptocurrency, propelled by a more favorable regulatory environment and increasing institutional adoption of Bitcoin. The report also mentions that the pro-crypto appointees by the Trump admin may be highly beneficial for digital asset valuations.
2. Expanding Crypto Offerings: Robinhood is expected to list 20-30 more cryptocurrencies in 2025, and launch staking features and stablecoins, all expected to drive revenues up by 30% from the past few years.
3. Take Rate Expansion: Robinhood’s “take rate” (the percentage of each transaction it earns as revenue) has grown from 35 bps to ~50 bps in 2024, raising profitability. Still, larger exchanges are taking rates of 60-70 bps, with HOOD expected to grow these rates as well.
4. Bitstamp Acquisition and Global Expansion: A mid-term factor may be the potential entry into the global exchange space and new avenues to a global retailer. In the near term, exchanges using blockchain technology such as tokenized securities, will increase volume in retail traders in an area not touched on in years.

The report lauded Robinhood’s ability to maintain strong operating leverage.

In 2024, operating costs fell by 20% year-over-year, while marketing costs grew significantly, signaling a strategic focus on attracting new customers and expanding the platform’s reach.

Adjusted EBITDA grew from $536 million to $1.4 billion, guiding to 10% YoY revenue, a total of $2.1 billion in the future.

Total assets under custody (AUC) are also touching as high as 193 billion, a full 25% growth QoQ.

Bernstein concludes that Robinhood has now “decisively turned around to positive EPS”, emphasizing blockchain technology to make the process more efficient. In the financials, a 33x Price/Earning will lead to earnings estimates.

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