Robinhood’s acquisition of Bitstamp could expand its crypto offerings for institutional clients, boosting its edge against Coinbase and Kraken, says Bernstein.
According to the article, the acquisition might allow the trading platform to provide a more extensive selection of cryptocurrency products to a more institutional clientele.
Broker Bernstein stated in a research report on Friday that 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.
As one of the first cryptocurrency exchanges, Bitstamp has “stood the test of time over multiple cycles,” according to the broker.
As per the research, Bitstamp lists over 85 tokens, whereas Robinhood offers retail investors in the U.S. and Europe over 30 tokens. The trading platform can provide markets for many more tokens by acquiring 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 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 could give a more extensive selection of cryptocurrency items to a more affluent customer base. With a $30 price objective, Bernstein rates the Robinhood stock as a performer. In Friday’s early trade, the shares barely moved, closing at roughly $23.
In research released on Thursday, broker JMP stated that the purchase of Bitstamp will “drive opportunities to broaden Robinhood’s participation in the evolving crypto value chain.” Owning an exchange will provide Robinhood with chances to integrate itself more fully into the cryptocurrency world. It may enable the platform to participate more actively in tokenizing equities and assets.
The article continued that the acquisition will expedite Robinhood’s European expansion and increase its visibility to institutional clients.
As Bitstamp is only slightly profitable, JMP stated that it anticipates little growth from the acquisition. With a $30 price target, JMP has an outperform rating on the stock.