Goldman Sachs: this fintech down 70% from its IPO price is still a sell

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Shares of Robinhood Markets Inc (NASDAQ: HOOD) are down 8.0% on Friday after a Goldman Sachs analyst downgraded the stock that’s already down 70% from its IPO price to “sell”.

Robinhood won’t be profitable until fiscal 2024

Goldman Sachs’ William Nance sees several headwinds that will make it challenging for Robinhood to turn profitable in fiscal 2023. In his note, he said:

As the benefits of stimulus wane and the impacts of higher gas prices and inflation work through the economy, we believe HOOD could continue to see higher levels of churn as these investors leverage their smaller dollar account sizes for everyday spend.

User growth and engagement has been slowing down at Robinhood, resulting in mounting losses in recent quarters. Goldman Sachs was one of the underwriters for fintech’s IPO last year.

Jim Cramer reacts to Goldman Sachs’ call

Famed investor Jim Cramer has repeatedly warned investors to not own unprofitable companies in this environment. Commenting on Goldman Sachs’ call, he said on CNBC’s “Squawk on the Street”:

This piece is devastating. Seems like Robinhood found its market, enjoyed it for a while, but now they’re down. The company has gone quiet, it used to be very boisterous. The joy with which younger people approached the market may be a thing of the past.

Earlier this week, Robinhood said its users can now buy, trade, and transfer Bitcoin through the app.

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