Citi Research analyst Christopher Allen took over coverage of Robinhood Markets Inc. late Monday, and in doing so downgraded the online-trading stock to neutral from buy. Robinhood “has done a lot to right its ship recently, including materially lowering the cost base, improving active trader offerings, and rolling out attractive products,” Allen wrote. At the same time, however, he sees “a mixed outlook from here given potential headline risk from upcoming SEC market structure proposals, a cautious equity-market outlook, and potential fallout from FTX impacting crypto trading revenues and the customer base.” He called out a number of “potential implications” for Robinhood stemming from FTX’s stunning collapse. There’s the “potential liquidation of 56.3M HOOD shares (7.4% of outstanding) owned by Sam Bankman-Fried through Emergent Fidelity Technologies,” though the timing of that is “uncertain” in Allen’s view. Additionally, FTX’s implosion has removed it from the list of possible Robinhood acquirers. Allen cut his price target to $10 from $11 on shares of Robinhood, which are up more than 4% in premarket trading Tuesday despite the downgrade.
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