Joe Terranova on Robinhood: “I don’t think they want to be a meme stock”

Robinhood Markets Inc (NASDAQ: HOOD) has been the talk of the market this year since it was at the centre of the retail trading frenzy that gained unprecedented traction in recent months. Now that the fintech company has gone public, the debate is a bit different, with analysts and investors questioning if Robinhood itself is a meme stock?

Robinhood debuted on Nasdaq at $38 a share last Thursday. After a slide to around $34, the Reddit community returned with the latest show of its strength that pushed the stock to over $70 yesterday. At the time of writing, HOOD is exchanging hands at $62, with Hightower’s Stephanie Link cautioning against it, saying, ‘it’s super expensive’.

Joe Terranova’s remarks on CNBC’s “Squawk Box”

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While the retail activity might be a good thing in the short-term, Vitrus Investment Partners’ Joe Terranova is not sure if Robinhood would want to be a meme stock in the long run. In his interview with CNBC’s “Squawk Box”, he said: 

“I don’t think they want to be a meme stock because that will discourage institutional investors. It’ll take the attention away from the true fundamentals of the company and leave it all about the volatility.”

What Terranova thinks Robinhood should do

Referring to Wednesday’s rally, Terranova noted that options traded at a level that was last seen with Facebook when it went public in 2012. In Robinhood’s case, however, it was driven by the retail community.

“If they don’t want to be a meme stock, the immediate strategy has to be figuring out ways to raise more capital, taking advantage of the price appreciation whether that’s through a secondary or other form of raising capital.”

Such “prudent management”, Terranova added, might not result in a decline in user base either. Also on Thursday, Wolfe Research’s Steven Chubak said on CNBC’s “TechCheck” that “Robinhood is uninvestable”.