Robinhood (HOOD) Stock Up 6.5% on $200M Bitstamp Buyout Deal
On Thursday, Jun 6, Robinhood Markets, Inc. HOOD announced that it has inked a deal to buy Luxembourg-based cryptocurrency exchange Bitstamp for $200 million. Robinhood’s shares jumped 6.5% on the news during the trading session.
Bitstamp, founded in 2011, is the world’s longest-running crypto exchange and is licensed to do business in all European Union states, among other countries. This acquisition will help Robinhood Markets gain a strong foothold in the European and Asian markets and get it into the league of industry leaders like Coinbase Global, Inc. COIN and CME Group Inc. CME. Coinbase currently sports a Zacks Rank #1 (Strong Buy) and CME carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
HOOD has been having a terrific year to date. In the first week of May, the company reported $618 million in revenues for the quarter ended March 2024, representing a year-over-year increase of 40.1%. It beat the Zacks Consensus Estimate of $544.7 million, pulling off a surprise of 13.46%. EPS for the same period was 18 cents against a loss of 57 incurred a year ago. The company beat the consensus mark of 5 cents, delivering a surprise of 260.00%.
The company’s stock price, which was at $22.97 as of Jun 6, has appreciated a whopping 80.3% in 2024. The rise was driven its increased crypto adoption and a major resurgence in retail crypto trading. All has not been rosy though, with legal compliance action lurking in the backdrop. In the same week that it reported its last quarter earnings, Robinhood disclosed that it received a so-called Wells notice from the SEC over tokens traded on its platform. In June 2023, SEC also initiated similar action against Coinbase. Binance’s troubles with the regulatory authorities also are all too well known.
The takeover of Bitstamp, thus, also helps HOOD in going institutional and raise its trustworthiness in front of authorities. About the acquisition, Robinhood CEO Vlad Tenev said on Thursday, “Many of our market makers say that a new exchange is needed, one that’s trusted, takes regulatory compliance seriously, and has an advantage in technology.”
HOOD’s expected earnings growth rate for the current year is 200%. The Zacks Consensus Estimate for its current-year earnings has improved 144% over the past 60 days. The company has a Zacks Rank #2 (Buy). Robinhood has a lot going for it currently and must be tracked in the months going forward.
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