Robinhood Initiated as Market Perform at KBW as Retail Trading Returns

Robinhood, the popular trading platform, has been initiated with a market perform rating and a $20 price target by KBW. Retail engagement has been increasing, leading to a sharp rise in Robinhood’s share price. However, the report raises concerns about the sustainability of this acceleration in retail trading. KBW suggests that if there is continued strength in retail stocks and cryptocurrency prices, the surge in retail engagement could persist or even grow. Despite this, the report notes that Robinhood’s stock price has already factored in the potential upside from new product launches and a higher level of normalized retail trading activity. Retail activity is expected to moderate and decline gradually in the coming years. The report also highlights that Robinhood is positioned as a small but rapidly growing player in the rapidly expanding U.S. self-directed brokerage industry. While the company currently holds a small share of total self-directed assets, it has a significant share of estimated brokerage accounts, leaving room for potential growth as its client base matures. Robinhood’s shares closed at $19.20 on Tuesday and have gained over 50% year-to-date.