What to Know:
- Ken Worthington, a JPMorgan analyst, expects a decrease in Robinhood’s crypto trading revenue in the first quarter due to diminished market enthusiasm.
- This forecast contrasts sharply with the fourth quarter of 2024, where there was a significant rise in the broker’s transaction-based revenue.
- Worthington revised his year-end price target for Robinhood from $45 to $44, keeping a neutral stance on the stock.
Robinhood’s tremendous crypto trading revenue from Q4 2024 might not be replicable, as stated by analyst Kenneth Worthington, who forecasts a drop in digital asset trading volumes for the upcoming quarter.
The trading platform is set to announce its Q1 results post market closure on Wednesday.
The previous quarter saw a staggering 700% increase in crypto trading revenue, which contributed to a notable rise in HOOD’s overall transaction revenue. However, Worthington perceives the momentum to stall in Q1, citing declines in both equity and crypto markets, particularly in the latter half of the quarter.
JPMorgan’s estimates suggest that Robinhood users traded around $52 billion in crypto during this quarter, down from $71 billion in Q4. This decrease is attributed to a ‘risk-off’ environment that has wiped out much of the market’s progress made since the start of the year. The company’s assets under custody (AUC) are anticipated to drop 5% from the previous quarter to $183.3 billion, still showing a 41% increase year-over-year.
The report notes strong retail purchasing in early April amid tariff-related updates from Washington; however, Worthington indicates that this activity might not suffice to bolster the Q1 results. He also cautions that reduced demand for margin and derivatives trading, mirroring trends at competitor Interactive Brokers, could negatively impact Robinhood’s overall performance.
Worthington maintained a neutral rating on the stock and lowered his price target by $1 to $44, indicating approximately a 10% downside from the current trading price, which is just under $49.
Disclaimer: Portions of this article were generated with the assistance of AI tools and reviewed for accuracy. For further details, see CoinDesk’s full AI Policy.
