Never assume that all the cards are on the table. I made that mistake with Robinhood (HOOD). After months of ranting about overvaluation and the vulnerabilities of PFOF, my objections have been effectively silenced. The announcement this week that Robinhood is adding a crypto wallet has me reevaluating my position. Yes, that’s me saying, “I was wrong.”
To all Coinbase (COIN) shareholders, of which I am not one, brace yourself. Robinhood is about to torpedo your sinking ship. The addition of a crypto wallet to a platform that already has 21 million active investors is a game changer. Many Coinbase users are already on Robinhood. What happens when they no longer need to leave the app for crypto transactions?
Coinbase has three times the users and has established itself as a premier crypto exchange platform. What they do not have is the option to buy equities. As Americans continue to buy into market democratization and no-fee trading, that’s the component that will separate these two platforms. They’re already going in different directions.
Robinhood went public at $35 in July and opened this morning at $46.50. The Coinbase IPO price was $250. They opened at $244 this morning and have already plummeted to $238. Their peak back in April was $342. Robinhood’s was $70. If you need that simplified, Robinhood is up 23.20% this year. Coinbase is down 4.43%.
Those who read my column know that I always look for reclamation projects. Stocks on a downtrend will often rebound and turn into big earners. Coinbase is not one of them. Robinhood, which has been under fire from me since they first announced their plans to go public, is making a strong move into an evolving market.
The X factor in this new development is conversion fees. My primary reservation about Robinhood was their revenue model. Payment for order flow is under attack by SEC Chair Gary Gensler. It’s unlikely that he can eliminate PFOF entirely, but retail brokers are bracing for it anyway. Currency exchange fees will diversify Robinhood’s revenue model.
A new crypto wallet from a popular retail trading platform will increase demand for Bitcoin (BTC), Ethereum (ETH), and others. North American crypto miners, who are already benefitting from China’s crypto ban earlier this year, should expect a boost when Robinhood rolls out their new crypto wallet. I’ll be keeping an eye on that as this story develops further.
For today, look at Bitfarms LTD (BITF). The Canadian-based crypto mining company was trading at $0.66 last December and is currently at $6.25 and climbing. They’re expected to report a loss in December, but they just hired a new PR advisory firm who should promote the share price higher, at least in the short term. This one could be a quick hitter.
On Monday, I’ll be releasing a report on a North American crypto miner that’s utilizing green energy to revolutionize the industry in the United States. They’re up 66% this year and projected to triple that in 2022. Check back with us next week so you don’t miss it.