On Thursday, Mizuho maintained its Buy rating on Robinhood Markets (NASDAQ:HOOD) stock with a steady price target of $23.00. The firm's stance comes in the wake of Robinhood's recent acquisition of Bitstamp, a deal valued at $200 million in cash.
Mizuho views this move as a strategic expansion for Robinhood, enabling the company to enhance its footprint in both Europe and Asia. The acquisition grants Robinhood access to licenses and a customer base spanning the European Union, United States, United Kingdom, and Singapore.
The purchase of Bitstamp is seen as a dual advantage for Robinhood. Firstly, it widens the company's geographical reach and customer access in key regions.
Secondly, it positions Robinhood to venture into the institutional cryptocurrency market, offering services to liquidity providers, hedge funds, and financial institutions.
Mizuho anticipates that this strategic move could potentially contribute approximately $25-50 million in annual revenues for Robinhood.
This estimate assumes an average daily volume (ADV) of around $200 million, which translates to nearly $70 billion annually. This figure is about 10% of the ADV reported by Coinbase (NASDAQ:COIN), with a conservative take rate of 5 basis points.
The analysis by Mizuho suggests that Robinhood's latest acquisition could lead to a favorable response from the stock market.
The firm expects that the integration of Bitstamp's capabilities and reach into Robinhood's existing services will bolster the company's position in the competitive financial trading and cryptocurrency sectors.
The anticipated revenue contribution from the acquisition is projected to enhance Robinhood's financial performance and market standing.
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