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What are the Robinhood analyst ratings and can they be trusted?
When I first started using Robinhood a few years ago, I wondered exactly what the Robinhood analyst ratings meant, where they came from and how reliable they were – so I did some research to try to uncover if they were worth paying attention to.
Robinhood analyst ratings are stock ratings from Wall Street analysts averaged out and intended to quickly show the expected performance of a particular stock over a given time period. As a general rule, Robinhood analyst ratings should be trusted, but only when used in addition to more in-depth research.
Now that we’ve established the basics of what analyst ratings are in Robinhood, let’s take a look at how we can use them to our advantage when making buying and selling decisions and what you really should pay attention to.
In This Post:
- Robinhood Analyst Ratings Explained
- What Do Robinhood Analyst Ratings Mean?
- How Often Are Robinhood Analyst Ratings Updated?
- How to do Your Own Research
- Final Thoughts
- References
Robinhood Analyst Ratings Explained
Analyst ratings found in Robinhood are a combination of many Wall Street analyst ratings which are averaged out to a percentage to help you decide if you should buy, sell or hold a specific stock.
This info is of course useful to an extent, but you really need to dig in and research a stock further to really have an understanding of what may happen and why and consequently what your best course of action is.
Never only rely on the analyst ratings to make a buy, sell or hold decision with your stocks. Doing so will typically be a costly mistake. We will cover exactly why momentarily.
Related: Unsettled Funds in Robinhood (5 Things You Should Know)
Are Robinhood Analyst Ratings Free?
You are able to view the overall analyst rating for individual stocks with your free Robinhood account.
Additionally, you can view several more in-depth analyst research products if you upgrade to Robinhood Gold for $5 per month.
What are Morningstar Ratings?
Morningstar is a investment research company that has a team of people who exclusively researches companies and their stocks to help determine the best investment opportunities.
They publish their findings in apps like Robinhood which are in-depth enough for experienced investors but simple enough for anyone to understand and do so from both a perspective of someone expecting the stock to increase in value and decrease in value.
They publish these findings from two different perspective and make a case for each as far as why the stock might increase in value and why it may decrease in value.
- Bulls Say: An evaluation of a specific stock from the viewpoint of someone who is expecting that stock to increase in value and their reasoning for thinking that.
- Bears Say: An evaluation of a specific stock from someone who is expecting that stock to decrease in value and consequently their reasoning.
What Do Robinhood Analyst Ratings Mean?
Robinhood analyst ratings are broken down into these 3 recommendations. Just as a reminder, these are just recommendations and it’s strongly suggested that you do additional research to determine exactly what your best course of action is with your investments.
- Buy: Analyst’s recommend that people buy when they are expecting the value of a stock to increase in the relative near future.
- Hold: Analyst’s recommend you hold anytime a stock isn’t expected to move much in the near term and/or when a long term play is logical.
- Sell: Analyst’s recommend you sell anytime a stock is expected to decrease in value in the near term.
This is where you’ll find the analyst ratings and Morningstar reports within Robinhood.
How Often Are Robinhood Analyst Ratings Updated?
Analyst ratings including Morningstar ratings typically publish new reports for stocks near earnings reports and when there are major events in the company. These events may include new product launches, mergers with another company, or a change in leadership (like the company’s CEO).
This is why it’s so crucial for you to do your own research to best determine your next course of action – the info you may be reading or seeing may be outdated and the recommendation may not be valid to the current situation any longer.
How to do Your Own Research
As I’ve stressed multiple times in this article, it is crucial for you to do your own research when making investment decisions.
Upgrading your Robinhood account to Robinhood Gold will give you access to additional resources that will help in the research process.
It’s also important to learn how to do technical analysis and how to read the charts to know where there is support and resistance (for example) and what the overall trend is for a particular stock.
Consistent long-term success with investing requires you to be able to do or know things without relying on information from someone else.
Final Thoughts
Robinhood analyst ratings are made up of an average of multiple Wall Street analysts. They are a good starting point when researching a stock but additional research is highly recommended before you make a buy, sell or hold decision. Morningstar ratings can help with this – especially if you have upgraded your Robinhood account to Robinhood Gold.
References
1. Chime – https://help.chime.com/hc/en-us/articles/224860707-How-do-I-contact-Chime-
2. Equifax – https://www.equifax.com/personal/credit-report-services/credit-fraud-alerts/
3. TransUnion, https://www.transunion.com/fraud-alerts
4. Experian – https://www.experian.com/fraud/center.html