Robinhood Markets Inc (NASDAQ:HOOD) shares are trading higher Monday. Needham upgraded the stock to Buy as the firm believes the company stands to materially benefit from Donald Trump’s election win.

What To Know: Needham analyst John Todaro upgraded Robinhood from Hold to Buy on Monday and set a price target of $40, citing tailwinds from Trump’s return to the White House primarily due to changes at the U.S. Securities and Exchange Commission.

The Needham analyst expects SEC chair Gary Gensler to resign in the coming weeks as Trump turns to a more pro-crypto chairperson. Gensler is known for his tough regulatory approach to crypto markets.

“On the back of this, we expect HOOD to significantly expand its crypto product offering and capture low-hanging fruit,” Todaro said in a note to clients.

Robinhood has historically limited its crypto offerings in an effort to avoid SEC enforcement actions, but the Needham analyst believes Robinhood will ramp up offerings to more closely compete with Coinbase Global Inc (NASDAQ:COIN) if a new SEC chair is nominated.

Robinhood added four new cryptos to the platform last week including Pepe, Solana, Cardano and XRP. Two of the coins were delisted in 2023 following SEC actions.

“We believe this move represents the first of many whereby HOOD will increase its tradable assets. Additionally, we envision the company will launch other products outside trading, including in staking,” Todaro said.

See Also: Forecasting The Future: 20 Analyst Projections For Robinhood Markets

The Needham analyst is also anticipating a retail-driven bull market for crypto. Just as the stock market has meme stocks, the crypto market has meme coins, the analyst said. The difference is that meme coins make up a much larger part of the overall crypto market than meme stocks do for the overall equity market. Todaro expects Robinhood to be an early mover in the listing of meme coins and other coins that retail traders find appealing, he said.

Finally, Todaro highlighted Robinhood’s diversified offerings for consumers. The company’s one-stop shop appeal will help the company capture share as retail investors come back into markets and interest rates fall, he said.

Robinhood’s diversified offerings make for a less volatile revenue profile spanning equity, futures, options, margin, crypto and more. The company’s diversification will help it remain profitable during bull and bear markets, the analyst said.

“We view our prior crypto estimates as overly conservative after HOOD added four new crypto assets for trading, and seems poised to launch more. For broader crypto markets, we view 2021 as the closest analog for 2025, a period when bitcoin bull market strength cascaded into ‘alt season’ whereby alt coin valuations and trading activity skyrocketed,” Todaro said.

“Our estimates, notably, are still significantly lower than 2021 levels representing additional upside to our estimates if 2025 has a similar run.”

Needham’s $40 price target is based on an EV/Revenue multiple of 10.5 times 2025 estimates. The multiple primarily reflects Robinhood’s crypto leverage and competitive positioning as a one-stop shop for all things financial services.

See Also: As Congress Turns Pro-Crypto, Will Stablecoin Be High On The Agenda?

HOOD Price Action: Robinhood shares were up 6.43% at $34.72 at the time of publication, according to Benzinga Pro.

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