Robinhood Markets Inc (NASDAQ: HOOD) is having a rather challenging November with the stock now down nearly 25% from its IPO price of $38 a share, prompting Deutsche Bank to announce a short-term “sell†rating on it this morning.
Analyst Brian Bedel lowered his price target
Deutsche’s Brian Bedel on Friday lowered his price target on Robinhood from $40 a share to $32 a share that still represents a close to 10% upside from where the stock is trading at the time of writing. In his note, the analyst wrote:
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We believe HOOD’s share price performance over 12 months would be primarily driven by a tug of war between investors embracing the company’s long-term growth potential upon product innovation and customer growth versus investors that are concerned about nearer-term challenges.
According to Bedel, Robinhood’s earnings and revenue, in the near term, could take a hit on rising costs and fading customer growth, which might have been worsened due to a recent security breach.
The meme-stock frenzy, he added, might have ‘overestimated the company’s core fundamentals and growth trajectory.â€
Kevin O’Leary shows the other side of the coin
On CNBC’s “Halftime Reportâ€, Mr Wonderful, Kevin O’Leary, who’s bullish on Robinhood, disagreed with Bedel’s outlook, saying there’s hardly a company on the S&P 500 that hasn’t had a security breach in the last decade. Building his case further, he added:
Meme stocks aren’t the majority of what’s traded on Robinhood. People are now using it to buy all stocks. At the end of the day, over 20 million accounts focused on a new generation of investors is a really unique position that no one else has.
O’Leary isn’t convinced the meme stock phenomenon is over yet, in the first place. The rating comes weeks after Robinhood reported its financial results for the third quarter.
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