According to Barclays, the short-term outlook for Robinhood looks bleak as competition and regulatory risks increase. The company downgraded the online trading platform’s stock to lighter to par weight and reiterated its $10 price target in a note Tuesday. The target price is about 5.5% higher than Robinhood’s stock traded at Tuesday’s close. Robinhood is down about 48% year to date. Analyst Benjamin Budish writes: “Robinhood has had a challenging 2022 so far, when growth was extremely rapid in 2021 and the years before that were marked by a severe decline in its retail business. odd”. “Looking ahead, rising rates and cutting costs will make it easier for HOOD to be profitable in the near term, but we think Robinhood’s customer base (i.e. younger and lower income) compared to Schwab and Interactive, we believe) is likely to be most severely impacted by continued inflation and a potential recession.” Cost cutting, headcount Cost-cutting measures A company’s performance, while a sign of discipline, can also hinder a company’s long-term growth by making it difficult to attract the talent it needs to move forward with its current product system. In its earnings report released in early August, Robinhood announced it would cut 23% of staff – after laying off 9% in April – and lower expectations for the full year. Robinhood should have an edge over other brokers in introducing new products to clients based on its technology platform, which will aid in higher valuations if it leads to diversified revenue streams. more, according to Budish. “However, we have seen mixed results with other fintech applications in terms of revenue diversification from core products. “While the product path suggests the company is moving in this direction, we think it will be some time before this can materialize.” At the same time, Robinhood has a lot of competition from other brokerages, fintechs, and crypto firms that will likely only get more fierce in the future. Companies like FTX, Cash App, and even PayPal all have similar offerings that can appeal to people with the same demographic as Robinhood. Regulatory risk There is also regulatory risk, as Robinhood has been fired several times since becoming a public company. Most recently, a judge ruled that the company faces market-manipulating claims about restrictions it places on meme-stock trading. “Aside from the regulatory (and political) headline risk, we also think that removing the ability to pay for the command line is likely to remain an overhang for some time, given recent comments.” of SEC Chairman Gensler has not yet been made a formal proposal.” Budish wrote. “Furthermore, while the change herein will primarily affect the company’s stock business, it is not inconceivable that such a rule would at some point apply to options.” and even cryptocurrencies, if the SEC succeeds in its pursuit of regulating various tokens as ‘security.'” Overall, Barclays has begun covering the brokerage space with a positive view. and buy ratings on Apollo, Ares, Interactive Brokers, P10 and Blackstone Group.It also has equal weight ratings on Charles Schwab, Coinbase and StepStone Group.- CNBC’s Michael Bloom contributed reporting.