The stock market is in the early stages of a period of rising retail investor activity, and that could bode well for Robinhood Markets , according to Bank of America.
The bank double upgraded the online brokerage and financial service provider to buy from underperform on Friday, raising its price target to $24 from $14, implying about 34% upside in the shares.
"Retail engagement peaked in 2021 and then declined significantly through the > 500bps of Fed rate hikes and the 2022 bear market, troughing in 2023," Bank of America analyst Craig Siegenthaler said in a note.
"However, following the emergence of a new bull market last year, we have monitored a rebound in multiple metrics at Robinhood Markets … and we expect this to continue through 2026."
Siegenthaler said a rise in retail engagement can drive 44% organic growth, margin loan utilization and more than 60% year-over-year trading activity that can drive payment for order flow.
Persons:
bode, Craig Siegenthaler, Siegenthaler, Michael Bloom
Organizations:
Bank of America, GameStop, AMC, " Bank of America
Locations:
underperform, Underperform