What happened
Shares of Robinhood Markets (HOOD 2.59%) were climbing for the second trading day in a row, trending higher with broad gains in the Nasdaq. Investors seemed to be responding to news that Cathie Wood's ARK Invest exchange-traded funds (ETFs) bought nearly 2.5 million shares of Robinhood on Friday, following an initial dive after it reported fourth-quarter earnings on Thursday night. Additionally, Citibank lowered its price target on the disruptive financial brokerage but maintained a buy rating on the stock, signaling confidence in Robinhood in spite of a weak quarterly report.
As of 12:08 p.m. ET today, the stock was up 11.2%, following a gain of 9.6% on Friday.
Image source: Getty Images.
So what
Growth investors pay close attention to Wood's moves, as she gained celebrity status in the investing world after a bold call that Tesla would hit $3,000 (split adjusted) turned true and her flagship ETF, ARK Innovation ETF (ARKK 2.61%), jumped nearly 150% in 2020. Though her funds, which are all growth oriented, have faltered recently along with a broader pullback in growth stocks, Wood's moves are still closely watched, and her bullishness on Robinhood likely helped propel the stock higher.
On Friday, ARK Innovation bought nearly 2 million shares of Robinhood, while ARK Next Generation Internet ETF (ARKW 2.66%) bought 231,000 shares and ARK Fintech Innovation ETF (ARKF 3.06%) bought another 263,000 shares.
Separately, Citibank analyst Jason Bazinet lowered his price target from $51 to $24 but kept his buy rating on the stock. Bazinet seemed to believe the stock was still undervalued for its growth potential.
Now what
Robinhood's first-quarter guidance called for revenue to decline on a year-over-year basis as it laps the boom around meme stocks like GameStop and AMC Entertainment that drove a frenzy among Robinhood traders a year ago.
While the company's rapid growth has quickly faded, it's hard to doubt its disruptive potential as it has 22 million funded accounts and has amassed a loyal following among millennials. Keep an eye on its moves in cryptocurrency as that could be its biggest growth market.
