WonderFi’s Q1 shows why it shouldn’t sell to Robinhood, this analyst says

WonderFi Technologies’ (WonderFi Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:WNDR) latest quarterly results reinforce the view that Robinhood’s $0.36-per-share offer undervalues the Canadian crypto platform, according to Haywood Capital Markets analyst Gianluca Tucci.

Tucci reiterated his “Buy” rating and $0.60 price target on the stock in a May 15 update, citing WonderFi’s strong fundamentals and market leadership.

In a May 15 update, Tucci pointed to WonderFi’s on-trend Q1 performance, improving sector multiples and rising investor appetite for crypto as reasons why a higher bid may be justified.

Earlier this week, Tucci said the all-cash offer from Robinhood 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.

WonderFi reported $16.4-million in revenue (excluding interest) and $3.6-million in Adjusted EBITDA for Q1, slightly ahead of the expected $14.8-million in revenue and just below the $3.7-million EBITDA estimate.

“We leave our 2025 estimates unchanged for now; however, note that since HOOD’s bid was tabled, peer multiples have continued to expand,” Tucci said. “WNDR’s two direct peers, COIN and HOOD, now trade at 19.2x and 33.1x 2025 consensus EBITDA, respectively, versus 14.8x and 31.3x, respectively, at the time of the initial bid (May 13, pre-mkt).

“We highlight the material delta to the implied valuation of HOOD’s bid of 10.4x our 2025 EBITDA estimate. We continue to view WNDR to be in a position of strength and not needing to do a deal for a deal’s sake, and believe the company would benefit from a formal auction process to maximize shareholder value on the heels of this bid from HOOD.

“We believe the $0.36 bid was constructed in a very different market of 30-90 days ago with a full-fledged global trade war, 1,000+ point intraday moves on the Dow, and crypto on the verge of a breakdown.”

He said risk capital and macro sentiment have returned in a flurry.

“Peer multiples have bounced quite robustly, and crypto is on the verge of a watershed breakout, making HOOD’s bid for WNDR quite opportunistic, in our view. We also highlight the coincidental and fresh IPO of eToro (ETOR:Nasdaq, NR), which priced at US$52/sh, above its initial range of US$46-50/sh, and closed at US$67.00 on its first trading day, indicating robust investor appetite.”

Tucci said the offer may have looked good initially, but it still undervalues WonderFi’s strong business and leading position in Canada’s crypto market.

“We believe the implied valuation of HOOD’s offer leaves significant room for a superior proposal and highlight 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. As such, we maintain our BUY rating and$0.60 target on the underlying strength of WNDR’s fundamentals and its position of strength in the Canadian market.’

Robinhood’s acquisition of WonderFi marks a strategic entry into the Canadian market via the cryptocurrency sector, potentially easing some early regulatory challenges.

Tucci expects this move will trigger defensive responses from Canadian financial firms, noting that Robinhood’s commission-free trading model has already shaken up the U.S. brokerage industry.

“Canadian banks and existing digital brokers, many of whom continue to charge commissions on trades, might be concerned that HOOD would introduce similar pricing pressure in Canada, squeezing profit margins,” he said.

Robinhood’s main revenue model in the U.S. relies on payment for order flow, where it earns fees from market makers in exchange for routing trades their way.

“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, tech-savvy company like Robinhood would significantly increase competition in the Canadian brokerage market. The company has built significant brand recognition, particularly among younger investors in the U.S.

“Robinhood’s user-friendly interface and focus on attracting younger investors could draw market share away from established Canadian players.”

Tucci maintains his previous estimates that WonderFi will generate $18.0-million in Adjusted EBITDA on $61.6-million in revenue for fiscal 2025. He expects those figures to improve to $21.2-million in EBITDA on $67.8-million in revenue in fiscal 2026.

Wonderfi is well-positioned to grow as Canada’s leading regulated and compliant crypto trading platform, with significant cross-selling upside as DeFi regulation evolves.

“WNDR owns and operates two of the largest registered retail crypto trading platforms in Canada and maintains a clear early-mover competitive advantage in the market,” Tucci said. “We believe we remain in the early innings of retail and institutional adoption of cryptocurrencies as an asset class, paving the way for long-term growth opportunities for WNDR, domestically and abroad. Direct peer valuations support a re-rate potential with takeout optionality as the Company scales and delivers on free cash flow.

“WNDR remains one of our Top Pick ideas.”