Robinhood Markets Inc. (HOOD) stock plummeted 5.02% on Tuesday morning following a downgrade from Wolfe Research.
Wolfe Research analyst Steven Chubak cut his rating on HOOD shares to "Peer Perform" from "Outperform", citing concerns over the online brokerage's payment for order flow (PFOF) revenue model amid increased regulatory scrutiny.
While citing Robinhood's strong growth and increased user engagement, Chubak warned that potential PFOF bans or restrictions "would severely undermine HOOD's profitability." The downgrade comes ahead of the SEC's anticipated proposal on reforming stock trading practices including PFOF.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.