It looks as if such a very long time in the past.
Return with us now to these thrilling days of yesteryear–also often known as early 2021–when so-called “meme shares” roamed the earth.
These had been shares whose retail buying and selling actions had been closely influenced by social media. They turned a highly regarded merchandise, pushed largely by on-line boards such because the r/WallStreetBets subreddit.
Customers on these boards inspired others to purchase and maintain closely shorted shares, with online game retailer GameStop (GME) rising as the preferred amongst this class.
GameStop’s meteoric rise was fueled by a large quick squeeze in early 2021, and the story turned the topic of final 12 months’s “Dumb Cash.”
Retail buyers pushed GameStop’s worth from below $3 to as excessive as $483 in late January of that 12 months, inflicting the hedge funds that had wager towards it to lose billions of {dollars}.
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Retail investor ‘Watching the wealthy cry’
“I did some analysis and instantly knew that I needed to place my cash in, make large positive factors, and watch the wealthy cry into their $5,000 fits,” one retail investor informed The Guardian.
Retail buyers additionally rallied round corporations equivalent to AMC Leisure (AMC) , Blackberry, and Mattress, Bathtub & Past, which filed for chapter final 12 months.
Robinhood Markets (HOOD) caught all types of hell and condemnation when the monetary providers firm froze trades for GameStop, citing points with unstable inventory and regulatory necessities.
Traders alleged that Citadel Securities, Robinhood’s largest market maker companion, directed the brokerage app to freeze trades- one thing each corporations denied.
Citadel CEO Kenneth Griffin and Robinhood CEO Vlad Tenev confronted questioning from the Home Monetary Providers Committee.
“I first realized of Robinhood’s buying and selling restrictions solely after they had been publicly introduced,” Griffin mentioned in ready testimony, in response to CNN. “All of us at Citadel Securities are dedicated to the wholesome functioning of the U.S. equities markets.”
A gaggle of buyers sued Robinhood and final 12 months a U.S. federal appeals courtroom has upheld a choice to dismiss an investor class-action lawsuit.
In the meantime, Citadel Securities agreed in September to a $7 million positive with the SEC over alleged order placement errors and misrepresentation of quick gross sales.
CEO: ‘I like the momentum’
Sure, it was fairly a time.
And it brings us to Feb. 13 of this year–also often known as Tuesday–when Robinhood beat Wall Road’s fourth-quarter earnings expectations.
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The corporate earned 13 cents a share on gross sales of $471 million, beating the FactSet consensus of a lack of 1 cent on gross sales of $454.7 million.
A 12 months in the past, Robinhood reported a lack of 19 cents a share on $380 million in income.
The corporate mentioned that transaction-based income elevated 8% year-over-year to $200 million, primarily pushed by cryptocurrencies income of $43 million, up 10%, and equities income of $25 million, which elevated 19%.
This was partially offset by choices income of $121 million, down 2%.
“We have been taking buying and selling market share for a while, and now we’re profitable internet asset inflows from each certainly one of our main opponents, averaging over $100,000 per switch,” Tenev mentioned through the firm’s name with analysts.
“And as for funded prospects, we have already grown extra within the first half of Q1 than we did in every of the final eight quarters,” he added, in response to a transcript of the decision. “So, I like the momentum we’re constructing, and I am enthusiastic about 2024,”
Traders additionally appeared to agree concerning the momentum, as Robinhood shares completed up 13% on Feb. 14 to $13.38.
Analyst: story ‘appears to be bettering’
Analysts additionally discovered issues to love within the outcomes, for probably the most half, and a number of other corporations raised their share worth targets.
Citigroup analyst Christopher Allen raised his RobinHood worth goal to $13 from $12.50 and stored a impartial ranking on the shares.
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The corporate reported a stable quarter because it noticed wholesome internet deposits and continued development of its gold buyer base, Allen mentioned.
The analyst famous that Robinhood continues to progress on a number of development alternatives and stays targeted on core expense development.
“Whereas elements of the story appeared to be bettering, we choose to attend on the sidelines,” Allen cited as the explanation for sustaining a impartial ranking.
JMP Securities raised its worth goal on Robinhood to $25 from $23 and stored its outperform ranking on the shares. The agency famous that Robinhood delivered a powerful end to 2023 with constructive outlook commentary for 2024.
The expense steerage highlights Robinhood’s self-discipline and operational leverage with large levers nonetheless to tug, the agency mentioned
Deutsche Financial institution analyst Brian Bedell raised his worth goal on Robin Hood to $12 from $11 and stored a maintain ranking on the shares.
In a analysis observe, he mentioned Robinhood reported an excellent fourth quarter, although its income from development initiatives continues to be unsure.
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