Normally, when a stock reveals that the Securities and Exchange Commission (SEC) may have its eye on their operations, that’s a pretty good sign to abandon ship. However, very little abandoning took place for online stock broker Robinhood (NASDAQ:HOOD), as investors sent shares down only fractionally in Monday afternoon’s trading.
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Robinhood got proactive about its potential troubles and revealed in a recent filing that an investigation was in progress. When the investigation concludes, Robinhood could end up being charged. Robinhood noted that it’s been engaged in “…years of good faith attempts to work with the SEC for regulatory clarity,” but that didn’t seem to stop the SEC from putting out a Wells Notice connected to its cryptocurrency trade in the United States.
A Wells Notice, for those not familiar, is basically a summary of charges that will likely be brought up, which, in turn, allows a defense to be prepared in advance.
Booming Business
Despite this, Robinhood is on track for a pretty good first quarter, according to word out of Mizuho Securities. Sufficiently good, in fact, to send the price target up from $20 to $21, noting that Robinhood actually has room for further growth as it looks to better monetize its Gold membership base. It wasn’t all good news, though, as Mizuho analysts also pointed out that there were risks due to competitors in the field and “lower ongoing interest” in investing overall from retail traders. Given the macroeconomic conditions currently in play, that projection is far from out of line.
Is Robinhood a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on HOOD stock based on four Buys, seven Holds, and four Sells assigned in the past three months, as indicated by the graphic below. After a 101.74% rally in its share price over the past year, the average HOOD price target of $19.58 per share implies 9.14% upside potential.
