Deutsche Bank says exceptionally attractive Robinhood Markets is a ‘hold’


Talk about hedging your bets. The influential tech team at Deutsche Bank (NYSE:DB) has decided not to assert its influence with the analysis of Robinhood Markets Inc (NASDAQ:HOOD) (NASDAQ:HOOD), initiating coverage of stock in the trading app with a ‘hold’ recommendation.

That’s the banking equivalent of a limp handshake – no conviction whatsoever.

Its searing insight into the group’s life as a listed company? Er, it may be a bit up and down for the next few months, or words to that effect.

Here’s the exact language for those with a yen to read more: “We view HOOD’s growth potential as being exceptionally attractive, with the founders and management team not only pioneering simple brokerage trading, but also positioning the company to leverage its creative app, related services, and substantial network of customers into multiple digital financial services arenas.

“However, we think the stock may be very volatile over at least the next six to twelve months as management invests heavily to execute on its growth plan, which may not begin to generate a more predictable revenue growth trajectory for at least one-to-two years.

“In the meantime, the business is highly levered to trading volumes, which can create earnings volatility and stir investor debate about the timing and magnitude of growth prospects.”

It reckons the shares are worth US$45 each, 29 cents less than Monday’s closing price.

Deutsche was one of a handful of banks and brokerages that began coverage after the IPO blackout period expired on Monday.

According to Reuters, three of the group rated the stock ‘buy’, while two were started with ‘hold’ recommendations.

JP Morgan was the lone naysayer with its ‘underweight’ call. It cited regulation and potential market as the risk factors driving its bearish stance.


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