Key Takeaways
A recent melt up in crypto has caught many eyes, with investors clamoring for exposure following the bullish move. The U.S. election helped light the fire in a big way, with President-elect Donald Trump’s favorable stance on digital assets paving the way.
It’s no secret that crypto is a volatile asset class, spooking many with a more conservative approach. Still, market participants can still obtain exposure through several stocks, a list that includes Robinhood Markets HOOD and Coinbase COIN.
Both companies facilitate crypto trading services, with their upcoming results likely to be positive thanks to massive inflows and trading fees. Let’s take a closer look at each for those seeking exposure to cryptocurrency.
Robinhood Crypto Volumes Soar
Robinhood Markets has transformed financial services by introducing commission-free stock trading and democratizing access to the markets for millions of investors. The company’s platform lets investors trade stocks, options, commodity interests, and crypto, invest for retirement, and earn with Robinhood Gold.
Analysts have taken a bullish stance on the company’s current year outlook, with the $0.71 per share estimate up nearly 375% over the last year.
The company recently delivered its Q3 results, which were primarily positive overall despite falling short of both EPS and sales expectations. EPS grew to $0.17 per share whereas sales of $637 million grew 36% year-over-year.
The $637 million sales print reflected the company’s second highest ever total, with YTD net deposits of $34 billion also exceeding prior full-year records. Below is a chart illustrating the company’s sales on a quarterly basis.
Notably, cryptocurrencies revenues of $61 million blasted 165% higher year-over-year to $61 million. And crypto notional trading volumes of $14.4 billion melted 112% year-over-year.
As shown by these results, the company’s crypto trading has rebounded in a big way. The company has overall struggled to exceed our consensus expectations concerning crypto-based revenues in recent periods, as shown below.
Coinbase Bounces Back
Coinbase is the largest U.S. cryptocurrency exchange. The outlook for its current fiscal year has been back-and-forth over the last year but overall remains bullish, with the $5.22 per share expected up nearly 850% over the period and suggesting 1310% growth on easy comps.
Shares have delivered a strong performance in 2024, gaining nearly 85% and seeing a melt higher following its latest set of quarterly results.
The company delivered a positive message concerning policy, stating:
‘We continue to be a trusted partner to policymakers and organizations like Fairshake — one of the largest non-partisan PACs — and StandWithCrypto — an independent grassroots advocacy group with approximately 1.8 million crypto advocates. Looking beyond Election Day 2024, we are prepared to work with either administration and believe the odds of pro-crypto legislation are better than ever.’
As shown below, the company’s transaction revenues have overall been mixed relative to our consensus expectations over recent quarters. It’s reasonable to expect a strong print here in its next quarterly print given the current trading environment.
Bottom Line
Crypto has again gripped investors, with the asset class going on a massive run over recent weeks. The momentum is undeniable, and for those seeking exposure through stocks, both companies above – Robinhood Markets HOOD and Coinbase COIN - would provide precisely that.
Both companies stand to benefit in a big way from higher trading volumes, and we’ll likely see this development in their upcoming quarterly results in a few months from now.
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