HOOD-wink? Investors aren’t celebrating a year after Robinhood’s IPO
The shares are now trading around $9, more than 75% below their IPO price and nearly 90% off their all-time high. Robinhood was hit hard by the fall in the broader stock market and the crypto crash, which scared off many would-be investors.
“While Wall Street and finance more generally can and should be democratized, Robinhood’s model based on maximizing frequent high-risk trades, incentivized by predatory gamified apps to generate as much payout as possible for order flow , is not how,” wrote Dennis Kelleher. , co-founder, president and CEO of Better Markets, a nonprofit investor advocacy group, in a report on the first anniversary of the IPO.
The specter of increased regulation is also a big concern. The Securities and Exchange Commission and the Financial Industry Regulatory Authority have previously accused Robinhood of misleading investors and fined the company accordingly. The SEC is also expected to come up with even stricter rules for online brokers soon.
Robinhood will release its second quarter results on August 3. Wall Street isn’t particularly optimistic about them.
Analysts are predicting another loss, and they’re also predicting revenue is down about 40% from a year ago.
The controversial trading app, founded in 2014, had exploded during Covid-19, amid historic market turmoil that coincided with millions of Americans working from home.
Make things worse for the company? Wall Street has a dour outlook for the stock. Analysts tend to be more bullish than bearish, especially for new companies that big investment banks have helped bring to market.
But of the 15 analysts who follow Robinhood, 7 have rated it a lukewarm “hold” and 3 have an outright “sell” on the stock.