Jim Cramer Attributes Robinhood's Sudden Stock Surge To 'Momentum' Not Business Fundamentals: 'That's Not What I Like'

Jim Cramer voiced concerns as Robinhood Markets Inc. (NASDAQ:HOOD) shares have seen an uptick, even as market commentators like over the stock’s recent performance.

What Happened: Robinhood has experienced a significant 41% increase in stock trading activity in February compared to last year, resulting in a 6% rise in its shares. Despite the uptick, Cramer expressed reservations about the sustainability of the growth, CNBC reported on Wednesday.

He suggested that Robinhood’s recent gains were driven by “pure momentum” rather than the company’s underlying business fundamentals.

“And that’s not what I like,” he added.

See Also: Shiba Inu May Have ‘Another 147%’ Upside Coming, Analyst Says As $31B Trading Volumes Overshadow Dogecoin

Why It Matters: The surge in trading activity on Robinhood’s platform is a critical indicator of retail investor engagement in the stock market, which can have broader implications for market liquidity and volatility.

Robinhood had a strong February, with a rise in total funded customers to 23.6 million and assets under custody reaching $118.7 billion, marking a 16% increase from January. The platform also reported a substantial $21.6 billion in net deposits over the past 12 months.

Analysts suggested that Robinhood could be undervalued as a cryptocurrency play, with predictions of the crypto market cap reaching $7.5 trillion compared to its current $2.6 trillion.

Cathie Wood’s Ark Invest sold a portion of its Robinhood holdings valued at $20.62 million, capitalizing on the company’s strong market performance. Ark’s move to offload shares could be interpreted as a strategic rebalancing or a response to the stock’s rapid ascent.

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