Why One Analyst Thinks Robinhood (HOOD) Stock Will Plunge to $5

  • Robinhood (HOOD) is falling alongside a new analyst rating.
  • This comes from Atlantic Equities analyst John Heagerty.
  • He dropped the stock to “underweight” with a $5 price target.
Robinhood app logo seen on smartphone on US dollar banknotes representing hood stock.

Source: mundissima / Shutterstock.com

Robinhood (NASDAQ:HOOD) stock could be set for a major fall if one analyst’s prediction for the stock and crypto trading app turns out true.

Atlantic Equities analyst John Heagerty recently weighed in on HOOD stock with a price target of $5 per share. For the record, that’s 30.8% lower than the stock’s closing price of $7.23 per share on Tuesday. It’s also below the analysts’ consensus price target of $18.36.

In addition to that, Heagerty also hit HOOD stock with a downgrade. This saw him dropping it from a “neutral” rating to an “underweight” rating. The current consensus rating for HOOD shares is “hold.” That comes from six buy, five hold, and four sell ratings.

So why is the Atlantic Equities analyst taking such a bearish stance on HOOD stock? Heagerty outlines his concerns in a note obtained by CNBC.

“With customers returning to pre-pandemic behavioural trends and a potential recession ahead, user engagement seems likely to decline further. In addition, the decline in equity markets is typically a prelude to lower retail trading volumes and the regulatory threat to PFOF revenues is substantial. Lastly, plummeting crypto valuations will have a direct impact on both volumes and order value.”

All of this combined has Atlantic Equities updating its estimates for Robinhood. That includes lowering its revenue guidance by 10% for 2022 and dropping it by 25% for the following year.

HOOD stock is down 4.8% as of Wednesday morning.

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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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