In the year-to-date, the price of Robinhood's shares has already soared more than 120%, rising from $39 in January.
When Robinhood holds its cryptocurrency-focused event in France this Monday (30), investors may have an opportunity to 'buy the dip,' indicated investment bank Compass Point on Friday (27).
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 thrive, wrote analyst Ed Engel from Compass Point in a note.
Robinhood's shares fell on Friday, recently dropping 1.3% to $83.46, according to Yahoo Finance. Year-to-date, the company's share price has already soared more than 120%, up from $39 in January. Compass Point raised its price target from $64 to $96, reiterating its buy recommendation.
On Monday, Robinhood is expected to 'reveal next-generation crypto products' during its 'first international crypto-focused event,' according to a company blog post. Meanwhile, the Ethereum conference EthCC is scheduled to start in Cannes, France.
The timing of Robinhood's event may not be mere coincidence, Engel wrote. He suggested that Robinhood may launch tokenized stock trading — as reported by Bloomberg News in May — on Ethereum or on a layer two network like Arbitrum. If this happens, it could result in 'higher margin trading fees' for Robinhood's self-custodial wallet, launched for European users at the end of 2023.
After guidance from the US Securities and Exchange Commission (SEC) that crypto asset staking does not constitute a security, Engel said it would not be surprising if Robinhood announced some functionality that allows users to allocate tokens on a network to earn rewards.
In Europe, the company began allowing Ethereum staking in November. Users can also stake Solana, but the feature is not available in the US, while companies like Coinbase allow staking of up to eight different cryptocurrencies in most US states.
It is likely that Robinhood will announce new token listings, adding support for major assets like Sui, Aptos, and Toncoin, Engel added. He stated that the company's current listings are 'lagging behind' those of competitors in the US, which offer support for trading hundreds of cryptocurrencies.
Finally, Engel raised the possibility that Robinhood might introduce perpetual crypto futures, mirroring Coinbase's efforts to launch regulated futures contracts in the US with long-term expirations.
A spokesperson for Robinhood declined to comment.
In the second quarter, Robinhood reported $252 million in revenue from digital assets, slightly exceeding analysts' forecasts. This represented a 100% increase compared to the same period last year.
With legislation on stablecoins advancing toward approval in both houses of the US Congress, Wall Street's enthusiasm has caused Circle's shares to soar after its IPO. Although Robinhood could benefit from stablecoins through its current crypto division, Engel stated that Compass Point analysts do not expect an announcement related to this booming segment at this time.