Apps & Software

Who Loves Robinhood and Who Doesn't: The Reviews Are In

Citigroup initiated coverage with a Buy rating and a $63 price target (upside potential of 47.7%), second only to Mizuho’s $68 price target (upside of 59.5%). The analysts do not expect Robinhood’s growth slowing but think that already has been “embedded in consensus estimates.” As for regulatory risk, that “is unlikely to be material in our view.”

Mizuho, of course, also rates the stock a Buy, commenting that it does not view Robinhood “as a meme stock phenomenon, but as a singularity that captures Generation Z’s zeitgeist.” The analysts go on to say that they see a total available market of “500 million U.S. bank accounts, 2x ARPU [average revenue per user] upside potential, … [and] … sustained 40-50% two-year growth.”

KeyBanc Capital Markets initiated coverage with an Overweight rating and price target of $55, reflecting an upside potential of 29%. The analysts are particularly keen on Robinhood’s aim of “democratizing investing for an emerging generation en route to establishing a more fully-fledged FinApp leveraging disruptive technology principles [and] effectively bending the CAC [customer acquisition cost] curve (<1/10th) driven by viral internet-like scaling in a ~$60T [total available market]."

JPMorgan is the lone dissenter, initiating coverage with an Underweight rating and price target of $35, a potential downside of about 18%. The bank’s analysts “do not see growth as sustainable and we question the ability of the company to generate competitive margins over time given the focus on such small accounts that have limited room to be profitable.” JPMorgan also downplays Robinhood’s chance of being the “next mega-app,” commenting that the company’s position is “inferior to larger existing participants that have been able to leverage peer-to-peer and payments technology to build and leverage a compelling network.” Market participants like JPMorgan no doubt.

Here’s a rundown of other Monday initiations on Robinhood:

  • Rosenblatt Securities: Buy, $55 price target
  • Piper Sandler: Neutral, $47 target
  • JMP Securities: Market Outperform, $58 target
  • Deutsche Bank: Hold, $45 target

The following firms had initiated coverage earlier:

  • Atlantic Equities: Overweight, $65 target (initiated July 29)
  • Wolfe Research: Peer Perform, $45 target (initiated August 5)
  • Redburn: Buy, $65.35 target (initiated August 17)

Robinhood stock traded up about 4.8% at $44.70 shortly after the opening bell Monday. The stock’s post-IPO range is $33.25 to $85.00. Based on these 13 price targets, the average target is $54.41.