According to broker Bernstein’s research study published on Friday, Robinhood’s (HOOD) acquisition of Bitstamp is a calculated move by the trading platform to grow its cryptocurrency business and places the company well against rivals like Coinbase (COIN) and Kraken.
Robinhood has “stood the test of time over multiple cycles,” according to the broker, while Bitstamp is one of the oldest exchanges offering cryptocurrency.
According to the research, Bitstamp lists over 85 tokens, while Robinhood provides retail investors in the U.S. with access to 15 cryptocurrencies and over 30 tokens in Europe. The trading platform will be able to offer markets for many more tokens by obtaining an exchange.
Analysts Gautam Chhugani and Mahika Sapra noted, “With a full exchange, HOOD gets access to global liquidity, and thus can offer the liquidity to its own broker platform, potentially improving its economics.”
According to the letter, exchanges provide a wide range of services, including prime broking, trading, custody, staking, and stablecoins. With the acquisition of Bitstamp, Robinhood might be able to provide a larger selection of cryptocurrency items to a more affluent customer base. With a $30 price objective, Bernstein rates the Robinhood stock as performer. In Friday’s early trade, the shares barely moved, closing at roughly $23.
According to a research released on Thursday by broker JMP, the acquisition of Bitstamp will “drive opportunities to broaden Robinhood’s participation in the evolving crypto value chain.” Owning an exchange will enable Robinhood to expand its presence in the cryptocurrency space and may even enable the platform to take a more active role in the tokenization of equities and assets, according to the report.
According to the article, the acquisition will expedite Robinhood’s expansion into Europe and increase its visibility to institutional clients.
JMP stated it did not anticipate meaningful accretion from the transaction because Bitstamp is, at most, minimally profitable. JMP has set a $30 price objective for the stock, with an outperform rating.