Bernstein Names Robinhood a Best Idea for 2025, Highlighting Crypto Growth and Regulatory Tailwinds

Robinhood Markets, Inc. (HOOD) has been designated a "Best Idea" for 2025 by Bernstein analysts, citing its robust growth potential, particularly in the cryptocurrency space, and its ability to capitalize on a favorable regulatory environment. The firm upgraded its price target to $51, representing a 29% upside from the current price of $39.59. Robinhood’s projected revenue for 2025 is $4.2 billion, a 55% year-over-year increase, with crypto trading expected to contribute 60% of its transaction revenue, up from 25% in 2024.

Bernstein highlights Robinhood's "sweet spot" within the crypto market, leveraging its captive base of 11 million active traders, competitive pricing, and plans to expand token listings significantly. Unlike crypto-native platforms such as Coinbase, Robinhood has historically operated a constrained crypto business, offering just 20 tokens compared to Coinbase’s 250+. However, under a potentially pro-crypto U.S. Securities and Exchange Commission (SEC), Robinhood is expected to accelerate token listings and launch additional services such as staking and stablecoin offerings. Its acquisition of the Bitstamp exchange and expansion into the European Union further bolster its positioning to capture market share in spot crypto trading.

Robinhood’s strategy for 2025 also focuses on diversifying revenue streams and de-risking its business model. The company has grown assets under custody (AUC) to $195 billion, a more than 100% increase year-over-year, by targeting younger, self-directed investors. Asset-based revenues accounted for approximately 40% of total revenue in 2024, driven by innovative products like Robinhood Gold, retirement accounts, and competitive incentives for asset transfers. Additionally, its Bitstamp integration in the first half of 2025 is expected to unlock new institutional and retail opportunities, while the introduction of non-trading crypto services could add significant revenue.

Valuation remains attractive, with Robinhood trading at just 8.1x 2025 estimated sales and 33x earnings, aligning with fintech and crypto platform peers. Operating costs, 90% of which are fixed, are expected to yield substantial operating leverage, with 2025 operating income projected at $1.7 billion. Bernstein remains bullish, noting that Robinhood's streamlined offerings, growing AUC, and expansion into underpenetrated markets position it well to outperform. While risks related to regulatory scrutiny and the volatile crypto market persist, Robinhood's disciplined execution and diversified revenue base make it a compelling choice for investors eyeing growth in the fintech and digital assets space.