The market is underestimating Robinhood's potential: Cantor

Investing.com -- Cantor initiated coverage on Robinhood Markets (NASDAQ:HOOD) with an Overweight rating and a $69 price target in a note Thursday, arguing that the market is not fully appreciating the company's growth potential.

“HOOD is one of the most popular financial services platforms, particularly in younger generations,” Cantor analysts wrote, noting that the company ended 2024 with $193 billion in assets under custody (AUC), 1.8 million net new funded accounts, and a 58.2% revenue increase. 

Additionally, the firm notes that Robinhood generated $1.4 billion in adjusted EBITDA while continuing to innovate with new products.

While Robinhood was once seen as “a one-trick pony,” Cantor sees the platform as now possessing “a handful of growth vectors” that can drive market share gains and long-term growth. 

The firm is particularly bullish on Robinhood’s crypto expansion, stating: “We are most optimistic about what HOOD is doing in Crypto, and given the regulatory tailwinds, we expect HOOD is about to step on the gas.” 

Analysts highlight Robinhood’s efforts in adding tradable cryptocurrencies, capturing institutional wallet share through Bitstamp, and expanding into staking.

Cantor believes Robinhood’s success in both equities and crypto will “result in upside surprises to asset growth, fees, and profitability over the medium-term.” 

The firm also points out that Robinhood is gaining share in equity brokerage, stating: “Relative to SCHW (NC), HOOD is experiencing faster growth when it comes to total assets, assets per account, equity order flow revenue, options order flow revenue, and margin balance growth.”

“With HOOD's taking share in equity and crypto, we believe risk/reward to be attractive at current levels, despite the strong YTD performance,” said the firm. “We believe the market is underestimating HOOD's potential within both equities and crypto.”