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Robinhood debuted Thursday on the Nasdaq, listed at $ 38 a share.
Here’s what the experts think about the business and the action.
Steve Weiss, chief investment officer and managing partner at Short Hills Capital, debunks some of the myths he sees around the company.
“N ° 1, they are not disruptors. They go into a business and offer free prizes, which many, many others are doing. So, I don’t think they’re a disruptor. No . 2, they have not democratized investment. It democratized a long, long time ago and they’re talking both sides of their mouth because they’re going to own, I believe, about 16% of the business, but control over 60% of the vote. So let’s go where their intentions are, which is not a shareholder, a voice. It really is bad governance. Now i don’t think [CEO] Vlad [Tenev] – he has done a great job up to this point, but thank goodness for the pandemic for them as it has fueled the growth. They were bumping into each other, they were growing up, but you can’t think of this business as a disruptor when it isn’t. You have to value it by comparing it to others who offer a much wider range of services. “
Anastasia Amoroso, chief investment strategist at iCapital Network, said the timing for Robinhood’s IPO looked right.
“It’s a hot environment for IPOs.… The valuation of this particular IPO is not that distorted compared to the reality we see for some of the fintech names. I know you can. compare it to Schwab and some of the others, but the reality is that the growth trajectory of a name like this is way, way superior to what we’ve seen for some of the other names. So, I will give you an example. The average IPO last year at the time of pricing was 2½ times the price it had in the last previous round, 2½ times. And this IPO was valued. at about 2.7 times. So it’s a bit expensive, but it’s actually not that expensive. And if you look at it in terms of multiple of income on that particular company, it’s about 25 times , which, again, is a bit steep, but given the interest in fintech names, that doesn’t surprise me. “
Jim Cramer, host of “Mad Money” on CNBC, said the company faces its fair share of problems.
“I think we all know they’ve had issues. They need to move on in that direction. Look, I’m not going to be arguing for a lot of things. I mean, there’s a controversy page in the article. Atlantic Equities which is… devastating if you read it. You would never own the stock. But… I guess what I’m saying is we don’t think the app messed things up, but it there are a lot of people in this industry who wish to have these 22 million [users]. “
Ritholtz Wealth Management CEO Josh Brown wouldn’t buy it here, although he’s watching it closely.
“Personally, I’m not interested in owning it, but I’m fascinated by the history and everything they’ve built. I think it really started out as regulatory arbitrage. The trick was to get big enough enough quickly before everyone knew what was going on. And they just paid a big fine related to some of these regulatory arbitrations, so maybe they’re going to clean up their law. But in the end, that’s not it. not an investment firm. It’s online gambling. If I wanted to invest in this, I would probably be more interested in DraftKings. I don’t really see this as being vastly superior in any way to other houses in brokerage brokerage. In fact, it’s lower in many ways. Robinhood’s median client has a balance of $ 240 on their account. The average is around $ 5,000. You compare this metric with a Charles Schwab and you would just say, “I want to own S chwab “. It’s going to have an outrageous assessment because of how fast it’s developing, and it’s undeniable. You can’t take it away from them. But what are they really growing up? And if you take out the payment for the order flow, if you say, “Okay, 75% of this business’s revenue is payments for the order flow,” which basically allows a group of investors to profit. from another group of investors, if that’s all the deal, I’m not sure that’s the sort of thing I personally want to invest in. I would also like to note that … a lot of the revenue growth over the past year is due to things like dogecoin. So, you could argue that there will be more in the future and the margins for crypto trading will remain high. I doubt. “
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