Robinhood (NASDAQ: HOOD) is making significant strides in the crypto market, with its crypto strategy attracting rich millennials and significantly boosting its revenue.
What Happened: In its stride of taking crypto to its financial center stage, Robinhood enhanced its crypto team, expanded its crypto trading services to the European Union and acquired Bitstamp for $200 million, DL News reported.
These efforts could increase Robinhood's operating income to approximately $900 million in 2024, and its market cap to between $19 billion and $23 billion in 2025, according to Bernstein analysts, as reported by DL News. The analysts added that around 60% of Robinhood's assets come from customers under the age of 43.
The firm is expected to generate $3.4 billion in revenue in 2025, with millennials contributing significantly to the growth. Cryptocurrency share of the company's Q2 transaction-based revenue jumped to $81 million, up 161% from the year-ago quarter.
"We want to be kind of the on-ramp to the crypto world," said Johann Kerbrat, the general manager of Robinhood's crypto arm.
Why It Matters: Despite facing potential legal action from the Securities and Exchange Commission over its crypto services, Robinhood remains bullish about its crypto strategy. Its aggressive push in crypto markets is to attract a younger, tech-savvy demographic.
In Robinhood's Q2 earnings call, CFO Jason Warnick said that Robinhood could launch new products and services like cryptocurrency lending, which could significantly boost revenue. He added that the platform is not able to allow trading on many coins because of the regulatory environment.
The demographic, which accounted for about 1% of U.S. household wealth in 2010, now contributes about 10% as Robinhood expanded its offerings of crypto, equity, derivatives, and savings-based products to younger demographics.