Robinhood’s involvement in the Trump administration’s new youth investment accounts could create a compelling long-term opportunity for shareholders, analysts say. This week, the Treasury Department announced Robinhood, together with BNY Mellon, will serve as the brokerage and initial trustee for the so-called Trump Accounts program – providing tax-deferred, custodial-style investment accounts for children. Robinhood will also build the Trump Accounts app. The role may not pull in huge fees today, but it could give the fintech company early access to a large base of future investors and their assets — a potential source of revenue in the long term – especially if young users stick with Robinhood as they get older. “While the app/account will be run by Treasury to start, we’re constructive on the off-ramp opportunity over time as Robinhood may prove to be a leading destination for accounts,” KeyBanc Capital Markets analyst Alex Markgraff said in a note Monday. “Participation in the design/infrastructure of the Trump Account program and the potential to act as a rollover destination aligns w/Robinhood’s [long-term] strategy to act as a primary financial platform for younger generations.” Compass Point highlighted that Robinhood can profit from both trustees and guardians before and after Trump Accounts are converted into standard IRAs – an opportunity “significantly more attractive than 401k rollovers,” analyst Ed Engel said in a note. Rollovers would allow Robinhood to retain more assets, translating into recurring fee or interest revenue. Moreover, because Robinhood will be involved in the design of the Treasury app, it “can implement discreet features” pushing users to roll over into Robinhood IRAs. Additionally, Robinhood can cross-sell other financial products to guardians and minors, with Compass Point noting the company’s target user base of Millennials & Gen Zs is already closer to prime parenthood age than Schwab’s average account holder. Robinhood CEO Vlad Tenev hinted at the monetization opportunity on Tuesday, telling CNBC’s ” Squawk on the Street ” that the company will be involved in “the first investment account for millions of people” and that although “these are intended to be the absolute lowest cost vehicles and ways to get customers invested … there may be, in the future, management fees through ETFs that are deployed in these accounts.” As of March 31, taxpayers had signed up more than 4 million children for Trump accounts, and more than 1 million were eligible for the government’s $1,000 seed contribution, according to the IRS. Shares of Robinhood are 6% higher Wednesday as part of the broader market’s U.S.-Iran ceasefire relief rally , but are still down 36% in the past three months. —CNBC’s Michael Bloom contributed reporting.
