From Cathie Wood to Cantor Fitzgerald, the big money is betting that Robinhood’s crypto slump is just a temporary speed bump

Cathie Wood’s Ark Invest snapped up over 500,000 shares of Robinhood on Wednesday, joining a wave of analysts who believe a surge in April trading activity will outweigh a recent earnings disappointment.

What to know:

• Cathie Wood’s Ark Invest bought about $39.7 million of Robinhood shares across three funds, underscoring its conviction in the trading platform after a weak quarter.
• Wall Street analysts are largely looking past Robinhood’s first-quarter earnings miss, citing early April data showing some of the strongest equity and options trading volumes this year despite ongoing softness in crypto.
• While some firms have cut price targets and warn that falling transaction fees and crypto volumes could pressure results for years, others see upside if trading momentum holds and new ventures like Robinhood’s planned prediction markets platform, Rothera, gain traction.

Robinhood's (HOOD) nearly 12% drop since its big earnings miss is being waived off by some big investors and Wall Street analysts.

The popular trading platform missed its first-quarter earnings and revenue estimates on April 28, mainly due to weaker crypto trading activities. The market punished the stock on the miss, but Cathie Wood's Ark Invest saw that as an opportunity and bought roughly $39.7 million worth of shares the next day, signaling confidence in the trading platform's future. Robinhood remains a meaningful position across Ark’s portfolios, accounting for roughly 3% and ranking among the top holdings in all three funds.

The contrarian move seems to have come at the same time as Wall Street analysts, who agreed that the miss was just a blip for the company, and early April data points to improving momentum. They added that equity and options trading volumes are trending toward some of the strongest levels this year, offering a potential counterbalance to continued softness in crypto.

Cantor Fitzgerald, which reiterated its 'Overweight' rating and $110 price target, said recent activity suggests stabilization. “Preliminary April equity/option trading volumes are tracking toward the highest monthly level this year,” the firm wrote, adding that the earnings miss was tied more to market conditions than core business issues.

Another firm, Compass Point, echoed that view, maintaining a 'Buy' rating while slightly lowering its price target to $107. The firm said the market reaction appears “backwards looking,” given expectations for a stronger second quarter.

While both brokers are bullish on Robinhood's outlook, some analysts cautioned that there are still risks, particularly in crypto trading, which is likely to continue weighing on results in the near term amid lower volumes and pricing pressure across the sector.

Investment bank Keefe, Bruyette & Woods (KBW), which already had the lowest price target on the stock, according to FactSet data, cut it further. The firm's analysts, who rate the stock a 'Hold,' warned that declining transaction fees could persist and cut its target to $65 from $75.

“Capture rates [are] missing across the board,” the firm's analysts said, noting that both crypto and options take rates have continued to fall into the second quarter. That trend has led to lower long-term forecasts, with KBW trimming earnings estimates through 2028.

That concern didn't seem to deter one of the top bullish analysts. Bernstein's analysts, who maintained their 'Outperform' rating and a $130 price target, pointed to signs that crypto activity may be stabilizing, as April hasn't shown any further declines in prices while equities and options remain strong.

Moreover, beyond trading, bullish investors are now turning their attention to new revenue streams.

Prediction markets are emerging as a key area, with firms highlighting growth in event-based contracts and upcoming catalysts such as product launches and global events. Robinhood’s planned prediction markets platform, Rothera, is viewed as a potential driver of future revenue and margin expansion, Cantor said.

For now, the outlook hinges on whether recent gains in trading activity can continue. If they do, Robinhood may return to growth sooner than expected. If not, pressure on transaction revenue could persist into the second half of the year.

The stock was up about 3% on Thursday, but fell about 37% this year. One of its crypto peers that tends to partially trade in tandem, Coinbase (COIN), rose about 3% on the day and is down about 19% year-to-date.

Read more: Why Cantor Fitzgerald thinks Robinhood and Coinbase are the best ways to play the prediction market boom

More For You

New data shows unusually high win rates in defense bets, building on research that 3% of traders drive prices and under 1% capture most profits.

What to know:

• Longshot bets win 51.8% of the time in Polymarket's military and defense markets, against a 14% baseline across political markets, a new study from the Anti-Corruption Data Collective has found.
• The findings suggest these markets are more vulnerable to information asymmetry, where a small group of traders may be operating...

Senator Warren questions Commerce Secretary Lutnick on Tether loan to family

2 hours ago

A Polymarket-linked bet on the weather in France forecasts a major data issue

4 hours ago

Gemini eyes prediction market challenge to Kalshi, Polymarket, secures derivatives license; shares surge

4 hours ago

Polymarket taps Chainalysis to bring Wall Street-level oversight to crypto prediction markets

4 hours ago

Crypto for Advisors: Breaking down the Sui blockchain

5 hours ago

Anchorage Digital and M0 team up to power next wave of regulated stablecoins

5 hours ago

Wasabi Protocol drained of $4.5 million in apparent admin key compromise

9 hours ago

Bitcoin faces $80,000 resistance as derivatives show signs of risk aversion

9 hours ago

Trump-backed World Liberty Financial races toward 62 billion token unlock with near-unanimous vote

12 hours ago

The long con: How North Korean spies spent months in-person to drain $285 million from Drift

7 hours ago

Seasonal trends favor bulls even as bitcoin ends April in a defensive mood

8 hours ago

Jack Mallers' Twenty One Capital surges after majority holder Tether proposes 3-way merger

21 hours ago