Citi has downgraded its shares in Robinhood Markets (HOOD) from ‘purchase’ to ‘impartial’. This is because of potential dangers from future market construction proposals by the US SEC, a cautious inventory market outlook, and the ripple impact of bankrupt platform FTX on crypto buying and selling. income and buyer base.
Analysts mentioned the timing was “unsure”. It is also necessary to notice that the implosion left it off Robinhood’s takeover candidate checklist. Citi analysts Christopher Allen and Ygal Arounian lowered their value goal on HOOD inventory to $10 from $11.
combined outlook
In a brand new analysis report, analysts write Robinhood has completed many issues proper, together with slashing its value base, bettering its lively dealer providing and rolling out compelling merchandise. He described a “combined outlook” within the quick time period whereas detailing some “potential implications” for Robinhood arising from the catastrophic collapse of FTX.
Citi additionally famous the “potential liquidation of 56.3 million HOOD shares (7.4% of excellent shares)” owned by Sam Bankman-Fried, the disgraced head of FTX via Emergent Constancy Applied sciences. Did.
The duo additionally count on Robinhood’s earnings from crypto buying and selling to say no by greater than 50% in 2023 after an analogous stoop this yr. Nevertheless, given the unstable traits out there, important progress might not materialize. That mentioned, Allen is bullish on choices exercise.
Moreover, the analyst mentioned the corporate’s “stable stability sheet, monetization of account progress potential and model consciousness, however we see a stability of danger and reward within the quick time period,” mentioned Robinhood’s long-term outlook. The outlook can be constructive.
Navigating a Chaotic Market
Earlier this yr, Bankman-Fried acquired a 7.6% stake in a buying and selling app value $648 million, believing the inventory to be “a horny funding.” As his cryptocurrency trade went bankrupt, the founder’s Robinhood inventory turned essentially the most liquid asset he might promote on his stability sheet.
To climate a turbulent yr, Robinhood final month introduced plans to put off 23% of its employees amid shrinking income and declining person numbers. Regardless of the cryptocurrency’s decline, the corporate’s CEO, Vlad Tenev, was bullish on the asset class. Talking on his Squawk Field on CNBC, the chief mentioned:
“Crypto nonetheless has a chance.
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