Robinhood isn’t shooting straight in 2022.
Shares of the popular retail broker
HOOD,
+9.65%
are down 28% so far this year, even after a monster rally on Friday, raising the question as to whether the company that has billed itself as democratizing investing is losing considerable traction among the proletariat.
Robinhood may be facing stiff headwinds, such as a shrinking base of retail investors now that the “meme” stock phenomenon is fading, but there has to be a silver lining, right?
Well, Robinhood would argue — and pretty much did on Thursday’s earnings call with analysts — that it will be bringing in new revenue this year thanks to product launches.
The company’s rosy outlook also is shared by four of the 14 analysts who cover the financial technology platform, assigning “Buy” ratings on the stock, which did bounce 9.7% off its all-time lows on Friday.
But let’s distill the bullish case for Robinhood’s future: New moves into securities lending, retirement accounts, and international crypto trading coinciding with its new cryptowallet offering.
Securities lending isn’t a difficult way to make money, especially with rising interest rates. But the equities market doesn’t appear to be a very popular place these days. In fact, some family offices and hedge funds at a recent conference in Miami, Fla., expressed an interest in avoiding stocks altogether for the foreseeable future.
And when it comes to those retirement accounts, who is Robinhood’s target audience? Weren’t they originally aiming for a less geriatric demographic?
One year ago, you could argue that Robinhood’s base was a die-hard pool of traders pushing the prices of GameStop
GME,
+4.69%,
AMC Entertainment
AMC,
+3.72%,
and other meme stocks. But when Robinhood halted buying on those stocks one year ago Friday, it may have frittered away trust among some of its stauncher supporters within the Reddit crowd.
Some former users may now perceive the app as an existential threat, one that colludes with market makers and short sellers to anchor the prices of their favorite stocks from soaring to the moon.
Others see Robinhood’s decision last year for what it was: a reaction from a mega-startup utterly unprepared to reckon with what their brand of democratized investing could do to the masses and ultimately the stock market.
Many of the people that wanted to keep trading but no longer trust Robinhood migrated to Fidelity or Charles Schwab
SCHW,
<bg-quote field="percentchange" format="0,000.00%" channel="/zigman2/quotes/201281754/composite" …….
