Robinhood’s Crypto Keynote Could Be a Chance to Buy the Dip: Compass Point

When Robinhood hosts a crypto-focused keynote event in France on Monday, investors may have an opportunity to buy the dip, investment bank Compass Point signaled on Friday.

Although some investors may “sell the news,” the trading platform has several potential catalysts on the horizon, including inclusion in the S&P 500 and a crypto business that continues to flourish, Compass Point analyst Ed Engel wrote in a note.

Robinhood shares turned lower on Friday, recently falling 1.3% to $83.46, according to Yahoo Finance. Year-to-date, the firm’s stock price has soared more than 120% from $39 in January. Compass point raised its price target to $96 from $64, reiterating a buy rating.

On Monday, Robinhood is set to “unveil next-generation crypto products,” hosting its “first-ever international and crypto-focused event, according to a company blog post. Meanwhile, the Ethereum conference EthCC[8] is set to kick off in Cannes, France.

The timing of Robinhood’s event could be more than a coincidence, Engel wrote. He posited that Robinhood could debut tokenized stock trading, as reported by Bloomberg News in May, on Ethereum or a layer-2 network like Arbitrum. If so, that could result in “higher margin trading fees” for Robinhood’s self-custodial wallet, which was rolled out to European users in late 2023.

Following guidance from the Securities and Exchange Commission that crypto staking is not a security, Engel said it would not be surprising if Robinhood made some announcement regarding users’ ability to devote crypto tokens to a network for the ability to earn rewards.

In Europe, the company began letting users stake Ethereum in November. They can also stake Solana, but the feature is not available to users in the U.S., while companies like Coinbase let users stake up to eight different cryptocurrencies in most U.S. states.

It’s likely that Robinhood announces new token listings, adding support for major assets like Sui, Aptos, and Toncoin, Engel added. He said that the company’s current “token listings are stale relative” to U.S. competitors, which can support hundreds of cryptocurrencies for trading.

Finally, Engel floated the possibility that Robinhood introduces perpetual crypto futures, mirroring Coinbase’s efforts to introduce U.S.-regulated futures with long-dated expirations.

A Robinhood spokesperson declined to comment.

In the second quarter, Robinhood notched $252 million in digital assets revenue, slightly outpacing analysts’ predictions. That represented a 100% increase from a year ago.

With stablecoin legislation inching toward passage in both chambers of Congress, Wall Street fervor has sent Circle’s stock soaring following its initial public offering. Although Robinhood can capitalize on stablecoins through its existing crypto arm, Engel said that Compass Point analysts are not expecting an announcement related to the buzzy crypto subsector.

Edited by James Rubin