Robinhood gets a double upgrade from Bank of America

Robinhood (HOOD) shares are trading higher after the company received a double upgrade from Bank of America. Robinhood now has a Buy rating after previously having an Underperform rating. Bank of America has set a $24 price target, up from $14.

The analysts behind the call point to increasing retail engagement, accelerating organic growth, and large expense reductions as catalysts for the company. Robinhood also reported major cryptocurrency gains in its latest earnings report.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video transcript

Robin wrote another stock that's trending here on Yahoo Finance, a double upgrade from Bank of America.

They upgrade the stock to buy and that's up from underperformed, sending shares to the upside.

You're looking at gains of just about 6%.

The analysts behind that call saying that they view the current entry point as quote, the total opposite of 2021.

And remember in 2021 you might not remember, but that is when the firm initiated coverage on this dog with that underperform rating and why they're saying that it's a bit different than what it was in 2021.

They're saying that right now rising retail engagement accelerating organic growth, they have positive operating leverage after large uh expense reductions and then also just an attractive valuation here and this comes following the massive surge actually that we've seen and Robin Hood share since the start of the year.

It would be interesting to see if investors buy this one and, and here's why Robinhood is going to be annexing itself just a little bit more closely to crypto than we had seen even back in 2021.

They just allowed or just announced one of the staking parts of the business as well.

That's gonna be a salon of staking product for European customers here.

Um And then there's gonna be some customer acquisition costs at least in this near term period at offering a 10% bonus for the 1st 30 days platform.

So once you get past those customer acquisition costs and start to look under the hood at the customer lifetime value that you're getting from some of those new members who are trading on the platform.

It's a larger question of what they are trading.

And if they are buying into more of the crypto side of the business that Robin Hood's cozying up to just a little bit more or the options, equities side of the business where uh ultimately I think for right now, there's been so much fanfare, at least within the consortium of traders there, the group of traders on Rob Hood among some core themes.

And it's been the core themes that have run away for the market right now.

It's been the themes like generative A I.

It's been themes around some of the biggest tech companies that have just been over uh overcrowded trades.

And so if you see more of those overcrowded trades, it's a larger question of OK, where does that rotation take place?

Once you do see some profit taking from some of those co users, do they continue to transact within the platform?

And you got Bank of America, a big their price target here it was initially 14 bucks.

Now the new price target of 24 bucks a share.