Robinhood: The Next Best Crypto Stock?

While investors looking for backdoor ways to trade the latest crypto rally first turned to Coinbase (COIN), driving the stock up 65% over the past month, Robinhood (HOOD) is beginning to garner attention. 

Shares in the retail stock trading app surged more than 9% today after jumping more than 10% yesterday. 

The gains came after the company revealed in a filing from December 4 that “November Crypto Notional Trading Volumes were roughly 75% above October 2023 levels.”

The company also hosted a dinner with multiple Wall Street analysts on Tuesday leading to several of the analysts publishing research notes on the stock. 

The announcements and schmoozing seem to be working as firms such as Cathie Wood’s Ark Invest have been selling Coinbase and buying Robinhood shares.

Coinbase vs Robinhood: A battle of crypto exchanges

While Robinhood is no novice to crypto, the company believes they are being overlooked in the market. Robinhood’s CEO Vlad Tenev even said as much on CNBC today…

While Vlad isn’t directly calling out Coinbase by name, it’s obvious that Robinhood is doing everything it can to bite into Coinbase market share.

The company is doing this by focusing on price transparency. While Coinbase continues to change the fees they charge customers to buy and sell crypto (the take rate), Robinhood is offering customers clear and unchanging take rates that are currently lower than other exchanges. The company does this by receiving volume rebates from market makers.

This goes to a point we have covered multiple times: Coinbase can only increase their take rate so far before customers look for other options.

Robinhood is also looking to court investor’s trading in the company’s stock by explaining how much more diversified their revenues are than Coinbase through their ability to offer 24 hour equities trading as well as crypto.

Our Take

It’s great to see Robinhood support crypto investing for their customers. What is unclear though is how much, if any, market share the company is taking from other US-based crypto exchanges. Potentially all of the growth the company is leaking from Binance as the world’s largest exchange is dealing with legal issues.

Regardless, Robinhood is making an enticing offer to investors.