It has been an exceptional 2024 for Robinhood (NASDAQ:HOOD), as HOOD stock is up by about 45% on the heels of a stock market rally and a cryptocurrency comeback. As of Feb. 29, the company’s assets under custody (AUC) totaled $118.7 billion, a 16% jump month-over-month (MOM). Equity trading volumes grew by 36% MOM to $80.9 billion while options volume rose by 12% to 119.1 million contracts. Finally, for the cherry on top, crypto trading volume increased by 10% to $6.5 billion.
These figures support the notion that Robinhood is a cyclical company heavily anchored to stock and crypto sentiment. However, investors can take advantage of these cycles.
According to Bernstein, HOOD stock should be valued at $30 per share. That’s the highest price target among all Wall Street analysts. Let’s get into the details.
HOOD Stock: Bernstein Initiates Coverage with $30 Price Target
The entire crypto market could be valued at $7.5 trillion by 2025 compared to $2.6 trillion today, according to Bernstein. The firm also believes that Bitcoin (BTC-USD) alone would have a market capitalization of $3 trillion by 2025. Bernstein believes its estimates are ignored by both buy- and sell-side analysts.
“This leads to HOOD growing its crypto revenues by 9-fold (5x vs consensus), leading to us being 54% ahead on HOOD’s 2025 consensus revenues and 3.5 times 2025 consensus earnings,” writes Bernstein.
Bernstein also points out that Robinhood’s crypto fee of 35 basis points (bps) is less than Coinbase’s (NASDAQ:COIN) fee of 150 bps. The company also has a first-mover advantage in relation to traditional brokerages that are hesitant or slow to offer crypto services to an older customer base.
Bernstein’s $30 price target is based on a roughly 7.8x multiple of expected 2025 revenue and a roughly 29.4x multiple of expected 2025 earnings. These multiples are “in line with the average crypto/broking/fintech multiples.”
Mizuho is also bullish on HOOD stock. Yesterday, the firm raised its price target to $20 from $17, citing bullish February performance numbers. Analyst Dan Dolev noted that Robinhood is steadily capturing market share as it increases its portfolio of products.
HOOD has an average price target of $14.61 among 17 analysts with coverage, implying downside of almost 19%.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
