After Robinhood shares collapsed 87% from peak and 70% from IPO, Goldman Sachs cuts it to Sell

Goldman Sachs downgraded Robinhood Markets to Sell on April 8, 2022, after the trading app's stock had collapsed 87% from its post-IPO peak and 70% below its IPO price, according to Wolf Street's report on the note. Goldman analyst William Nance cut the rating from Neutral to Sell and set a price target of $13, citing weak account growth and no clear path to profitability.

The downgrade is notable because Goldman Sachs was itself a lead underwriter of Robinhood's IPO in August 2021, alongside JPMorgan. Bloomberg's own headline on the note put the decline at 84% from peak — a smaller figure than the 87% cited elsewhere — though both accounts agree the stock had fallen roughly 70% below its IPO price by early April 2022. The discrepancy likely reflects the two outlets measuring the peak-to-date decline on slightly different trading days.

From $80 to about $12

Robinhood priced its IPO at $38 a share on August 3, 2021. The stock spiked to a peak of $80 in its first week of trading before sliding for months. By the time of Goldman's downgrade, shares traded around $11 to $13 — the level that produced both the 87% (or 84%) drop from the $80 peak and the roughly 70% drop from the $38 IPO price.

Goldman's reasoning

Nance's note pointed to fading retail user engagement and weak account growth as the core problem, according to Wolf Street. "We believe this lack of clarity around the path to profitability will prevent the stock from re-rating higher," Nance wrote. The concern was not abstract: Robinhood reported a $3.7 billion net loss for 2021 on $1.8 billion in revenue.

A rare underwriter reversal

It is unusual for a bank that helped price and market an IPO to turn negative on the same stock within a year. Goldman and JPMorgan led Robinhood's offering in August 2021, at a moment when retail trading volume — fueled by pandemic-era stimulus checks and meme-stock mania — was near its peak. Nance's downgrade effectively conceded that the growth story Goldman had helped sell to IPO investors eight months earlier was no longer holding up under the app's own account-growth numbers.

What it signals

An IPO underwriter turning Sell on its own client eight months after pricing the offering is a sharp signal about how quickly the market's read on meme-era retail brokerages had soured. Robinhood's business model leaned heavily on a burst of pandemic-era trading activity; Goldman's note effectively argued that engagement burst had faded without a durable profitability story to replace it. The stock's slide from an $80 peak to roughly $12 in eight months captured how far sentiment can travel when growth assumptions built into a hot IPO don't hold. A $3.7 billion annual loss on $1.8 billion of revenue is not a company burning cash to fund runaway growth — Nance's note argued it was a company whose core user-growth engine had already stalled, which is a harder story for a stock to grow out of.

US In News compiled this archived account from contemporaneous coverage by Wolf Street and Bloomberg. It restores a story originally published on this site in April 2022; figures are as reported at the time and differ slightly (84% vs. 87% decline from peak) depending on the outlet and trading day measured.