Big Investors Bet on Robinhood’s Crypto Rebound
Despite a nearly 12% drop in Robinhood’s stock after missing its first-quarter earnings and revenue estimates, big investors like Cathie Wood’s Ark Invest are betting on the company’s future. Wood’s firm bought $39.7 million worth of shares, signaling confidence in the trading platform. This move shows that some investors believe Robinhood’s crypto slump is just a temporary speed bump.
Cantor Fitzgerald and Compass Point are two Wall Street firms that agree with Ark Invest. They believe the earnings miss was due to market conditions, not core business issues. With equity and options trading volumes trending upward, these firms see potential for growth. Cantor Fitzgerald even reiterated its ‘Overweight’ rating and $110 price target, citing stabilization in recent activity.
Risks and Opportunities
While some analysts are bullish on Robinhood’s outlook, others caution that there are still risks, particularly in crypto trading. Investment bank Keefe, Bruyette & Woods cut its price target, warning that declining transaction fees could persist. However, Bernstein’s analysts maintained their ‘Outperform’ rating, pointing to signs of stabilizing crypto activity and strong equities and options trading.
Beyond trading, investors are turning their attention to new revenue streams, such as prediction markets. Robinhood’s planned prediction markets platform, Rothera, is viewed as a potential driver of future revenue and margin expansion. For those looking to earn passive income through crypto, EcoPool (ECP) offers a solution with its Cloud Rewards program, providing a way to earn $ECP while supporting green crypto initiatives.
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Moreover, beyond trading, bullish investors are now turning their attention to new revenue streams.
Prediction markets are emerging as a key area, with firms highlighting growth in event-based contracts and upcoming catalysts such as product launches and global events. Robinhood’s planned prediction markets platform, Rothera, is viewed as a potential driver of future revenue and margin expansion, Cantor said.
For now, the outlook hinges on whether recent gains in trading activity can continue. If they do, Robinhood may return to growth sooner than expected. If not, pressure on transaction revenue could persist into the second half of the year.
The stock was up about 3% on Thursday, but fell about 37% this year. One of its crypto peers that tends to partially trade in tandem, Coinbase (COIN), rose about 3% on the day and is down about 19% year-to-date.
Read more: Why Cantor Fitzgerald thinks Robinhood and Coinbase are the best ways to play the prediction market boom
