U.S. Robinhood Faces Crypto-Driven Risks; Bernstein Identifies Offsetting Levers

Bernstein’s recent client note reframes Robinhood’s current share weakness as a function of a crypto cycle that could either deepen or reverse, and then quantifies how each path would alter future profitability and valuation. The analysts model three structured downside outcomes — ranging from a multi-year muted crypto market to a simultaneous collapse in crypto and options activity — and attach 2027 earnings and multi-year price bands to each. Those scenario outputs show a wide spread: the mid and worst cases shrink earnings power substantially and imply material valuation compression versus Bernstein’s upside view. At the same time, the research highlights that trading in digital assets no longer dominates Robinhood’s top line, and that fee and non-trading businesses have become a larger share of revenue and a faster-growing component over recent years. That shift matters because it gives management operational levers — product diversification, banking and payments expansion, and options flow growth — to partially offset lower crypto volumes. The note also embeds macro assumptions about Bitcoin price paths, treating a prolonged ~$60k level as a meaningful stress input for retail crypto turnover. For investors this produces a trade-off: the current pullback has opened a valuation entry for those buying the optionality in Robinhood’s non-crypto growth engines, while leaving capital at risk if retail risk-on behavior permanently retreats. Brokerage economics remain sensitive to transaction frequency and asset mix; a structural decline in retail activity would force a re-rating that could take years to reverse. Bernstein’s reiterated outperform and $160 target reflect conviction that cyclicality will dominate over permanent market-share loss, but the modeled downside ranges underline how quickly expectations can be reset. In practice, near-term performance will hinge on where crypto trading volumes settle, whether options activity sustains its momentum, and how quickly non-trading revenue channels scale and retain customers. For corporate strategy, the findings suggest focusing on margin retention in lower-fee businesses and accelerating recurring revenue sources to reduce dependence on episodic crypto cycles. For investors, the note serves as a reminder to weigh scenario-driven risk-adjusted returns rather than a single-point forecast. Overall, Bernstein presents a roadmap of contingent outcomes rather than a binary verdict, signaling both material downside under adverse cycles and credible mitigation paths that preserve upside optionality.