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Robinhood receives double update from Bank of America
Robinhood (HOOD) shares are trading higher after the company received a double upgrade from Bank of America. Robinhood now has a Buy rating after previously having an Underperform rating. Bank of America set a price target of $24, up from $14.
The analysts behind the call point to increased retail engagement, accelerated organic growth and major expense reductions as catalysts for the company. Robinhood also reported big gains in cryptocurrencies in its latest earnings report.
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This post was written by Melanie Riehl
Video transcript
Robin wrote another trending stock here on Yahoo Finance, a Bank of America double update.
They upgrade the stock to buy and that turns from underperformance, sending the stock to the upside.
You’re only seeing gains of about 6%.
The analysts behind this call say they see the current entry point as a quote, the total opposite of 2021.
And remember, in 2021 you may not remember, but that’s when the company started covering this dog with that underperforming rating and why they’re saying it’s a little different than it was in 2021.
They’re saying now increased retail engagement accelerates organic growth, they have positive operating leverage after major expense reductions and also just an attractive valuation here and this comes after the massive increase we’ve seen and Robin Hood’s share since then the beginning of the year.
It would be interesting to see if investors would buy into this one and that is why Robinhood will be attaching itself to crypto a little more than we had seen in 2021.
They just allowed or announced one of the parties to the deal as well.
It will be a staking product hall for European customers here.
Um, and there will be some customer acquisition costs, at least in this short term period, when offering a 10% first 30 day platform bonus.
So once you get past those customer acquisition costs and start looking under the hood at the customer lifetime value that you’re getting from some of the new members that are trading on the platform.
It’s a bigger question about what they are trading.
And whether they’re buying more of the crypto side of the business that Robin Hood is getting a little bit closer to or the options, equity side of the business where ultimately, I think for now, there’s been so much fanfare, at least within the consortium of traders there, Rob Hood’s group of traders are among some central themes.
The story continues
And it was the central themes that escaped to the market at this time.
These were topics like generative AI.
It was themes around some of the biggest technology companies that just got through crowded negotiations.
And so if you see more of these overcrowded trades, it’s a bigger question of OK, where does this rotation occur?
Once you see some profit made by some of these co-users, do they continue to transact within the platform?
And you have Bank of America, a big price target here, initially at $14.
Now the new price target is $24 per share.