- Cryptocurrency trading currently accounts for 12% of Robinhood’s revenue, with Ethereum representing 25% of the volume.
- Market expectations suggest Robinhood’s recent stock rebound could continue, reaching a target price of $20.
Financial analysis firm Keefe, Bruyette & Woods (KBW) has expressed confidence that Robinhood, is well-positioned to win a legal dispute against the U.S. Securities and Exchange Commission (SEC). This assessment follows a Wells Notice issued to Robinhood by the SEC, which was surprising given the company’s conservative strategy in listing digital assets.
KBW’s Perspective on the Case
According to KBW, Robinhood currently lists just 15 cryptocurrencies in the U.S., compared to competitors that offer over two hundred. Analyst Kyle Voigt and his team predict that Robinhood’s operations will not change soon. They believe Robinhood can defend itself against the SEC’s claims, citing the firm’s strict listing guidelines as an advantage.
“We expect no change to HOOD’s current U.S. crypto operations or asset listings and expect the SEC to file a lawsuit in the coming months,” Voigt noted.
KBW also pointed out that cryptocurrency trading makes up around 12% of Robinhood’s total revenue. They speculate that the SEC may target specific cryptocurrencies available on Robinhood’s platform. The most problematic situation, revenue-wise, would be if the SEC classifies Ethereum as a security, which currently accounts for about 25% of Robinhood’s crypto trading volume.
Market Position and Future Outlook
Despite the legal uncertainty, Robinhood’s stock has risen slightly to about $18. KBW gives the trading platform a “market perform” rating, with a target price of $20, as it expects Robinhood to post its best quarterly earnings in nearly three years. A rebound in stock markets and crypto trading has contributed to these results.
Earlier in the year, expectations of global interest rate cuts helped push U.S. stocks and Bitcoin higher, drawing more traders to the market and increasing Robinhood’s transaction-based income.
“In the core business, we saw a notable rebound in volumes this quarter across equities, options, and crypto, with total volumes up nearly 20% in Q1 through February reported metrics,” J.P. Morgan analysts stated.
KBW noted that the final outcome of legal proceedings between Robinhood and the SEC may not be known until late 2025. The firm also acknowledged the ongoing regulatory challenges that other companies like Coinbase are facing.
