Robinhood: A Key Player in Crypto Deregulation

Analysts at research and brokerage firm Bernstein have named crypto and stock trading app Robinhood as the top “crypto deregulation trade” of the cycle following Donald Trump’s win and a Republican sweep in the recent U.S. elections.

Pro-Crypto Policies and Market Expectations

Trump and the Republican party proposed various pro-crypto policies during the campaign, including:
– Establishing a national bitcoin stockpile.
– Promising to “end the war on crypto regulation.”

These policies are anticipated to benefit the industry post-inauguration. Bernstein analysts expect Robinhood’s stock (HOOD) to continue outperforming across key performance metrics. They have increased their 2025 revenue estimate to $4.19 billion from $3.85 billion due to growing market share, projecting $1.3 billion in earnings for that year. As a result, they raised their price target to $51, from an earlier target of $30, which has already been reached following the election results.

Stock Performance

Robinhood shares have experienced a 176% gain year-to-date, closing at $35.24 on Tuesday, with the new target suggesting a 45% upside potential. As of pre-market, HOOD is trading up 2.2% at $36.

Regulatory Constraints and Future Projections

Bernstein analysts noted that Robinhood has operated a regulatory-constrained crypto business, having barely listed 15 tokens compared to over 250 tokens on Coinbase. They predict that under a potentially pro-crypto SEC, this will change, making Robinhood the biggest beneficiary of crypto regulatory tailwinds.

They expect Robinhood to increase its crypto revenues by 20% by the end of 2025, comprising 38% of total revenues due to market share gains from new token listings and crypto product lines.

New Listings and Service Expansion

Following Trump’s election victory, Robinhood has listed four additional tokens: SOL, ADA, XRP, and PEPE. Analysts believe that with a more favorable regulatory environment expected under Trump’s administration, Robinhood may close the gap with competitors in 2025.

The firm has also limited itself to traditional trading services, refraining from offering staking, stablecoins, and lending due to regulatory constraints. However, analysts predict new product lines may be introduced within the next 12 months, along with potential expansion into Europe through the proposed acquisition of the crypto exchange Bitstamp.

Gautam Chhugani maintains long positions in various cryptocurrencies, while certain Bernstein affiliates act as market makers or liquidity providers in Robinhood’s equity securities.