Robinhood stock reversed higher Thursday after the mobile trading platform was downgraded to sell. The stock has a 44% gain for the year through Wednesday.
Citi downgraded Robinhood shares to sell from neutral, but raised its price target to $16 from $13. Robinhood stock is off to a strong start this year, largely due to surging bitcoin prices, analyst Christopher Allen wrote in a research note, reported by Barron's. Allen believes Robinbood's jump in stock price disconnected valuation levels from its fundamental outlook.
HOOD shares have a 92% correlation with bitcoin in 2024, despite cryptocurrencies accounting for only about 13% of first-quarter revenue, Allen wrote.
Any material pullback in bitcoin prices is a risk to Robinhood stock, as are slower retail activity or a market pullback, given current valuations, according to Citi.
Meanwhile, the average FactSet rating for Robinhood is hold with an $18.34 price target.
Elsewhere, bitcoin surged 4.4% over the past 24 hours as of Thursday morning to trade around $70,700. Bitcoin has fallen from its March 14 record high of $73,798 but remains above its prior peak of $68,990 set in November 2021. The world's largest cryptocurrency has bolted 68% in 2024, with most of the gains compounding in February and March after the January launch of spot bitcoin ETFs.
Robinhood Stock
HOOD stock initially fell 3%, then reversed to surge 3.6% Thursday. The stock rebounded off its 21-day exponential moving average to close just above its 10-day line. .
Shares broke out from a cup base in mid-February and spiked 52% to hit 20.55 on March 27 — the highest level since December 2021.
Robinhood soared 140% from its November low, but is still 50% below its July 2021 IPO price. The trading platform is due to report its fist-quarter financial results on May 8.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
