Robinhood eyes crypto diversification as trading strength persists

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Forward Guidance has covered Mag 7 and automaker earnings . But let’s jump to Robinhood, which is looking to wade deeper into crypto.

The trading platform’s transaction revenues amounted to $583 million in Q1. Roughly 43% of that ($252 million) came from crypto trading.

The $252 million total is less than last quarter’s record crypto transaction revenue of $358 million, Robinhood reported — but up 100% year over year. 

It appears concerns around the health of Robinhood’s user base after April’s market selloff have dissipated. After all, Compass Point analysts Ed Engel and Joe Flynn noted that net deposits accelerated last month ($6.5 billion) and margin balances “fared OK” ($8.4 billion). 

“Equities trading is at a four-year high,” Robinhood CFO Jason Warnick said on yesterday’s earnings call. “Options are in the zone of an all-time high, and crypto trading is north of $8 billion.” 

Compass Point increased its HOOD price target to $64. Robinhood shares were trading for around $47 at 2 pm ET — down nearly 4% on the day.

Robinhood CEO Vlad Tenev said that while the company seeks to make itself less reliant on crypto transaction volumes, it also looks to diversify the crypto business itself.   

We’ll be watching for product news that might come out of Robinhood’s June crypto rendez-vous in France.  

“Regulatory ambiguity has deterred HOOD from launching staking in the US, as well as listing a wider range of tokens,” Engel and Flynn wrote in a note. “With the SEC moving faster than expected , we see a chance that Robinhood announces staking and new token listings at the June event.” 

Tenev called clarity on listing crypto asset securities “a big opportunity,” adding: “We’re just in the early innings of having this technology permeate the financial system.” 

The CEO reiterated, too, that tokenizing private equities would be a huge unlock for individuals and companies. That is one of Robinhood’s top policy priorities.

And don’t forget about Robinhood’s acquisition of crypto exchange Bitstamp, which remains on track to close mid-year.  

It’s clearly a crypto-linked stock to keep an eye on.

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