What Happened?

Shares of financial services company Robinhood (NASDAQ:HOOD) jumped 5.7% in the morning session after Compass Point initiated coverage of the stock and assigned a Buy rating with a $61 price target. The target price implied a potential 45% upside from where shares traded before the coverage was initiated. The firm added "We initiate coverage on HOOD with a Buy rating and $61 PT. We see Robinhood increasing ARPUs for its 12m crypto users alongside an improving U.S. regulatory environment."

After the initial pop the shares cooled down to $42.01, up 4.8% from previous close.

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What The Market Is Telling Us

Robinhood’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was a day ago when the stock dropped 7.1% as markets seemed to have caught "tariff/trade war fever" once again (Nasdaq down 1.9%, S&P 500 down 1.2%) amid broader geopolitical anxiety. The volatility was perhaps also related to uncertainty surrounding the Fed's rate decision to be announced later in the week. The consensus estimate was for the Fed to keep interest rates at the range of 4.25%-4.5%. This could be a bit of a letdown for the dovish camp, expecting some policy relief to help offset the growing market weakness amid the ongoing trade war, which some analysts considered to be bad for growth and corporate earnings.

Robinhood is up 6.5% since the beginning of the year, but at $42.01 per share, it is still trading 35.6% below its 52-week high of $65.28 from February 2025. Investors who bought $1,000 worth of Robinhood’s shares at the IPO in July 2021 would now be looking at an investment worth $1,207.

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