Robinhood's April Crypto Volumes Fall 47% From Q1 Average, But Analysts See 3 Reasons To 'Stay Constructive'

Mizuho Securities analysts remain optimistic about Robinhood’s HOOD crypto business, despite trading volumes falling from a $15 billion monthly average in Q1 to $8 billion in April.

What Happened: Despite April’s volume decline, Mizuho Securities identified three key reasons to “stay constructive” on Robinhood’s crypto prospects:

• April’s $8 billion in crypto volume, while lower than recent months, still exceeds historical averages.
• Take rates are trending upward, with Q1 gross take rates reaching 57 basis points compared to 53 basis points in Q4 and just 37 basis points in the first half of 2024.
• History suggests volumes per funded account rarely remain suppressed when Bitcoin prices rise, as they did by 10% in April.

“Take rates are moving up – and we believe they will continue that trajectory,” Mizuho analysts led by Dan Dolev wrote in a note reported by The Block on Friday.

Dolev highlighted that Coinbase’s retail take rate is nearly three times higher, suggesting “ample upside potential” for Robinhood to continue raising its rates.

The firm maintained its “outperform” rating on HOOD shares while adjusting its price target from $80 to $65 and lowering second-quarter crypto volume estimates from $35 billion to $32 billion.

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What Experts Are Saying: Other analysts also adjusted their outlooks following the earnings report.

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JP Morgan‘s Kenneth Worthington maintained a Neutral rating while raising his price target from $44 to $47.

He noted that despite softer crypto volumes, Robinhood still attracted a record $18 billion in net new deposits this quarter, with only about 15% due to promotions.

Piper Sandler‘s Patrick Moley maintained an Overweight rating with a $70 price target, highlighting strong adoption of Robinhood’s newer offerings.

During the earnings call, management revealed that futures, index options and prediction market products were each already generating approximately $20 million in annual run-rate revenue.

Robinhood CEO Vlad Tenev expressed enthusiasm about the prediction market performance, noting that over 1 billion contracts had been traded in the last six months across various events including U.S. elections and sports competitions.

The company plans to “expand the offering into a wider variety of contracts over time,” according to Tenev.

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