Robinhood Soars on Double Upgrade From Long-Time Bearish Analyst

(Bloomberg) — Robinhood Markets Inc. shares are on track for their best week of the year as meme stock mania grips the markets. The jump has even long-time bears at Bank of America Corp. taking notice.

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Analysts led by Craig Siegenthaler raised their recommendation on the online brokerage to buy from underperform, saying rising retail engagement and accelerating organic growth will drive 2025-26 earnings up.

“Following the emergence of a new bull market last year, we have monitored a rebound in multiple metrics at Robinhood Markets and we expect this to continue through 2026,” Siegenthaler wrote in a note on Friday. He has been bearish on the stock since he initiated coverage of the company in late 2021 after it debuted in the public markets.

Shares of the Menlo Park, California-based company have rallied 23% this week, putting them on track for their best week of 2024. The rally has been partly due to retail traders turning to its platform to partake in the latest meme stock frenzy at the start of the week.

However, the stock has been challenged for most of the three years it has been public, the analyst wrote. Retail engagement peaked in 2021, then declined significantly through 2022’s bear market and eventually troughed last year, said Siegenthaler.

Shares have fallen about 8% through Thursday’s close since Siegenthaler started covering the stock — underperforming the boarder market, with the S&P 500 Index rallying nearly 13% in the same period.

The analyst, which also hiked its price target on the stock to $24 from $14, noted that Robinhood is now profitable after cutting expenses much quicker than expected, supporting current valuations. Investors “underappreciate its significant operating leverage generation and attractive free cash flow,” Siegenthaler wrote.

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