Stock Story -
What Happened:Shares of financial services company Robinhood (NASDAQ:HOOD) jumped 7.5% in the morning session after it received a double rating upgrade from Bank of America (NYSE:BAC) analyst. The analyst upgraded the stock's rating from Underperform (Sell) to Buy and raised the price target from $14 to $24. The new price target represents more than a 25% upside from where shares traded when the upgrade was announced. The analyst added, citing the reasons for the upgrade, "We view the current entry point as the opposite of 2021 when we initiated at Underperform after its IPO given: (1) rising retail engagement and accelerating organic growth; (2) positive operating leverage after large expense reductions; (3) attractive valuation following increases in EBITDA/EPS."
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What is the market telling us:Robinhood's shares are somewhat volatile and over the last year have had 19 moves greater than 5%. In context of that, today's move is indicating 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 3 days ago, when the company gained 9.9% on the news that heavily shorted stocks (so-called meme stocks) continued to rally, with both AMC Entertainment (NYSE:AMC) and GameStop (NYSE:NYSE:GME) up more than 60%. On May 13, 2024, famous Wall Street Bets (Reddit stock trading forum) trader Keith Gill (known online as Roaring Kitty) returned to Twitter (also known as X) after three years, fueling a greater retail appetite for meme stocks. These moves could also drive volumes on trading platforms such as Robinhood as more retail investors jump on the bandwagon.
Robinhood is up 61.2% since the beginning of the year, and at $19.93 per share it is trading close to its 52-week high of $20.13 from March 2024. Investors who bought $1,000 worth of Robinhood's shares at the IPO in July 2021 would now be looking at an investment worth $572.66.
![Why Is Robinhood (HOOD) Stock Soaring Today](https://d68-invdn-com.investing.com/content/picba4d262953f901e724d403031ea8dd1e.jpeg)