Robinhood Markets ‘zombie’ stock is at risk of falling to zero, New Constructs says

Robinhood Markets Inc.
HOOD,

was the latest target of New Constructs LLC, the independent research firm that has taken aim at meme stocks AMC Entertainment Holdings Inc.
AMC,
-4.12%
and GameStop Corp.
GME,
-6.11%
by calling them “zombie” companies facing severe cash burn. In a note titled “Zombie Stock: Robinhood — Democratizing Foolish Investing,” New Constructs Chief Executive David Trainer said Robinhood’s commission-free trading platform made the “reckless” meme stock trade possible. Trainer said that while many meme stock traders were “in awe of Robinhood’s fun and exciting user interface,” the meme stock trade was only fun and exciting for a select few, and positive returns on the trades have tended to be short-lived. “Not surprisingly, Robinhood’s extreme social media popularity has made it a meme stock, while its cash burn makes it a zombie stock that is at high risk of declined to $0 per share,” Trainer wrote. He said raising additional cash would likely come at a high cost, especially given that the cryptocurrency market has cooled and Robinhood’s growth has slowed. Robinhood’s stock, which rose 0.9% in premarket trading, has plunged 47.2% year to date, while the S&P 500
SPX,
-1.36%
has lost 15.4%.