WonderFi can do better than the Robinhood deal, Haywood says

Robinhood’s bid for WonderFi Technologies (WonderFi Technologies Stock Quote, Chart, News, Analysts, Financials TSX:WNDR) may be a crypto coup — but not everyone’s sold on the price.

Haywood Capital Markets analyst Gianluca Tucci says the $0.36-per-share all-cash offer undervalues WonderFi’s strong position in Canada’s crypto market and leaves room for a higher bid, even as the deal gives Robinhood a fast track into the country’s financial landscape.

In a May 13 note, Tucci reiterated his “Buy” rating and $0.60 target price on WonderFi, arguing the company’s strong fundamentals and leadership in Canada’s crypto market justify a higher valuation.

WonderFi announced on May 13 that it entered into a definitive agreement to be acquired by Robinhood Markets in an all-cash deal valued at $0.36 per share. The offer represents a 41% premium to WonderFi’s May 12 closing price and a 71% premium to its 30-day volume-weighted average price, giving the deal a total equity value of approximately $250-million.

Based on Haywood’s 2025 EBITDA estimate, the deal values WonderFi at 10.4 times earnings, lower than the average for similar companies and lower than Coinbase and Robinhood’s own valuation multiples.

“We believe the bid, while a nice premium-to-market, undervalues WNDR’s business and market-leading position in the Canadian crypto market,” Tucci said. “We believe the implied valuation of HOOD’s offer leaves room for a superior proposal and highlights that Robinhood’s proposed acquisition of WNDR and foray into the Canadian market may have peers (Canadian banks, other digital brokers) scrambling to play defence.

“The acquisition of WonderFi signals a strategic move by Robinhood to enter the Canadian market through the cryptocurrency sector, potentially mitigating some of the initial regulatory hurdles.”

Tucci thinks that WonderFi will post $18.0-million in Adjusted EBITDA on revenue of $61.6-million in fiscal 2025. he thinks those numbers will improve to $21.2-million on revenue of $67.8-million in fiscal 2026.

Haywood expects Canadian financial firms may respond defensively to Robinhood’s entry. In the U.S., Robinhood shook up the market with its commission-free trading, something Canadian banks and brokers, who still charge fees, might worry could happen here, too. Robinhood also makes money in the U.S. by routing trades to market makers for a fee, a practice that could face scrutiny in Canada.

“This practice has been scrutinized by regulators in the USA due to potential conflicts of interest and concerns about best execution for customers,” Tucci said. “Canadian regulators might be hesitant to allow this, but if HOOD were permitted to use it, it could give them a cost advantage that Canadian firms would struggle to match without also adopting the controversial practice.

“The entry of a well-funded and technologically advanced player like Robinhood would intensify competition in the Canadian brokerage market. Robinhood’s user-friendly interface and focus on attracting younger investors could draw market share away from established Canadian players. Robinhood has built significant brand recognition, particularly among younger investors in the USA. This brand awareness could give them a strong advantage in attracting Canadian customers, potentially requiring Canadian firms to increase their marketing spending to compete.”

The deal signals a strategic shift for Robinhood and sets the stage for ripple effects across Canada’s financial sector.

“Through a long and focused effort, WonderFi successfully built one of Canada’s largest registered Crypto-Trading platforms,” said Bobby Halpern, Executive Chairman of WonderFi, in a May 13 press release on the deal. “This transaction is the culmination of those efforts and the launchpad for Robinhood to democratize finance across Canada.”

WonderFi will continue to operate post-transaction, with its leadership team joining Robinhood Crypto. The company’s employees will be integrated into Robinhood’s Canadian operations based in Toronto.

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