Vlad Tenev, CEO and Co-Founder, Robinhood.
  • Robinhood shares have significant upside and downside potential, according to the Wall Street analyst you ask.
  • After Robinhod’s IPO last month, Wall Street began posting analyst notes on the stock trading app popular with millennials and millennials.
  • Here’s what 3 Wall Street analysts are saying about Robinhood’s potential future.
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Should investors buy or sell Robinhood? Opinions are divided on Wall Street.

The stock trading app popular with Millennials and Gen Z is starting to receive a slew of house notes from companies on Wall Street after its IPO in July.

Investors are probably eager to hear what analysts think of Robinhood’s stock after its volatile swings after the IPO. The stock initially fell 13% from its IPO price of $ 38 per share, before soaring more than 150% to a high of $ 85. The share is floating just below $ 44 per share at time of publication.

Robinhood is under increased scrutiny from regulators and critical investors, who are wary of the sustainability of its order flow payment business model, which allows transactions at $ 0 commission. But the company has seen incredible growth over the past year amid wild swings in stocks and crypto like GameStop and dogecoin.

Here’s what 3 Wall Street analysts are saying about Robinhood’s potential future.

JPMorgan: Underweight, target price of $ 35

“We see the recognition by investors of Robinhood’s success in equity value. In addition, we see a number of risks including regulation, pricing and market saturation, as well as challenges for the business including its focus on small accounts which we believe limit Robinhood’s ability to achieve competitive margins and profitability, ”JPMorgan said in a note Monday.

“We are seeing a very committed SEC that fined and continued to call Robinhood specifically for the activities and actions it is investigating. There are some risks involved in how Robinhood is paid – PFOF and the associated crypto payments made up 75% of the revenues in 2020, ”JPMorgan mentioned.

Goldman Sachs: neutral, target price: $ 56

“We believe HOOD is well positioned to continue to experience best-in-class user growth, leveraging its innovative referral program and strong customer acquisition through word of mouth. Additionally, we expect HOOD to focus more and more on cross-selling its already sizable products. user base with additional financial services products, driving ARPU’s expansion over time and driving growth in both revenue and AUC, ”Goldman said in a note from Monday.

“While we are constructive about the longer-term story, we are pitching at Neutral given 1) the near-term uncertainty regarding the sustainability of retail levels, and 2) the current overshoot of payment for flow. of orders, which could result in an overall risk or in the worst case, a significant estimate risk, ”added Goldman.

Mizuho: Buy, target price: $ 68

“With 22.5 million active users and 50% recovery of all new retail accounts in the United States, we see Robinhood not as a stock market phenomenon, but as a singularity that captures the times. Generation Z, ”Mizuho analyst Dan Dolev said in a note Monday.

Critics argue that HOOD bears inordinate risk due to high options trading and user ‘herd mentality’. We disagree. A TAM of 500 million US bank accounts , 2x ARPU upside potential, success in cash management and becoming a single currency app make HOOD attractive. We see sustained growth of 40-50% over two years and value HOOD at 14x revenue for 2023, ”Mizuho mentioned.

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