KBW Initiates Robinhood Coverage

KBW suggests potential for sustained strength in retail stocks and cryptocurrencies but anticipates a deceleration in retail activity after the initial surge.

KBW has initiated the trading platform, Robinhood, with a market performance rating and a $20 price target in light of the resurgence in retail trading.

As per the report, retail engagement experienced a substantial surge during the initial quarter, which prompted KBW to initiate its coverage of Robinhood.

Robinhood’s stock price increased significantly, the company reports, as retail trading activity accelerated.

The longevity of this surge in retail commerce is currently undetermined, prompting inquiries regarding its sustainability on the part of KBW.

The research report emphasizes the possibility of sustained strength in the prices of retail stocks and cryptocurrencies, implying that the increased involvement from retail investors could endure or potentially expand.

Nevertheless, analysts at KBW advise that the present value of the stock already incorporates the expected advantages stemming from introducing new products and a heightened degree of routine retail trading.

KBW Forecasts Deceleration in Retail Activity

They foresee a deceleration in retail activity after the figures recorded in the initial quarter, progressing gradually downward until 2025.

However, they also emphasize the substantial potential for expansion in the self-directed brokerage sector of the United States, thereby establishing Robinhood as an emerging participant in this growing industry.

At present, Robinhood controls an estimated 20% of all U.S. self-directed brokerage accounts and a mere 1% of self-directed assets in the United States.

As its clientele matures, the platform has the potential to surpass the industry’s overall asset growth.

Tuesday’s closing price of $19.20 per share of Robinhood signifies a year-to-date appreciation of more than 50%.