Usually, if a stock reveals that the Securities and Exchange Commission (SEC) may be looking at its operations, that’s a pretty good sign to abandon ship. However, on the online stock broker Robinhood, there were very few abandonments (Nasdaq:Hood), as investors pushed the stock only slightly lower in Monday afternoon trading.
Robinhood has been proactive about addressing potential issues and disclosed in recent filings that an investigation is ongoing. Once the investigation is complete, Robinhood could eventually face charges. Robinhood said it has “made a good faith effort over the years to work with the SEC to clarify the regulations,” but it still has no complaints that the SEC has made any warranties related to crypto trading in the U.S. I couldn’t seem to stop it from issuing notifications.
A Wells Notice is essentially a summary of the charges that may be brought against you, allowing you to prepare your defense in advance.
booming business
Despite this, Mizuho Securities says Robinhood is on a fairly strong trajectory in the first quarter. In fact, it’s good enough to raise the price target from $20 to $21, noting that Robinhood actually has room for further growth as it improves the monetization of its Gold membership base. But it’s not all good news, with Mizuho analysts also pointing to risks from competitors in the space and a “continued decline in interest” in investing among retail traders overall. Given the current macroeconomic situation, that prediction is not far off.
Is Robinhood a good stock to buy?
Turning to Wall Street, analysts are bullish on HOOD stock based on 4 buys, 7 holds, and 4 sells assigned over the past three months, as shown in the chart below. We have a consensus rating of Hold. HOOD’s average price target of $19.58 per share means it has an upside potential of 9.14%, after the stock has increased 101.74% over the past year.
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