Robinhood Stock Price and Forecast: Why is HOOD stock crashing?


  • Robinhood falls sharply after results disappoint investors.
  • HOOD falls over 11% as the company warns about Q3 numbers.
  • Robinhood is closely watched as a barometer of the retail volume in the market.

Robinhood (HOOD) released earnings after the market closed on Wednesday, and investors did not like what they heard. Earnings per share (EPS) came in ahead of analyst expectations at $0.11 versus $0.08. Revenue was also ahead of forecasts, coming in at $565 million versus the $531 million estimate. It should be noted these are Refinitiv estimates, which is the norm, but there are only three analysts covering the stock. Monthly active users also more than doubled from 10.2 million in Q2 2020 to 21.3 million. The numbers were good, so why the fall? The reason is that Robinhood warned that the next quarter Q3 would be impacted by lower trading activity. "For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenue and considerably fewer new funded accounts than in the prior quarter," the company said.

Probably this is not that surprising when you consider the explosion in retail trading that has taken place in the first half of 2021. Early January and February saw the GameStop (GME) story unfold and then moved to AMC apes as the summer came through. Keeping up with that level of growth and comparisons was always going to be a tough act. For example, revenue in Q2 was up 131%. The company had also benefited strongly from cryptocurrency trading and that sector has also quietened down as Bitcoin fell sharply and volatility had calmed down in the sector with Dogecoin also off the front pages.

Robinhood (HOOD) key statistics

Market Cap $42.3 billion
Price/Earnings  
Price/Sales 41
Price/Book 19
Enterprise Value  
Gross Margin 0.54
Net Margin

-1.02

52-week high $85
52-week low $33.25
Average Wall Street Rating and Price Target Hold, $711

Investors also have concerns over a practice known as payment for order flow in which retail brokers send their orders to a larger wholesale broker and receive payment for sending orders. Payment for order flow is perfectly legal, but the SEC is looking into the practice. Robinhood said on the earnings call that it does not think payment for order flow will be banned and that it does not think that payment for order flow revenue would be difficult to replace.

Robinhood stock forecast

Robinhood is currently trading at $44.05 in Thursday's premarket after falling on the back of results. $36.48 is the point of control since the stock went public and would act as strong support. The point of control is the price with the highest level of volume. There is a gap or vacuum of volume between $44 and $36, so holding $44 is key, breaking is likely to see a further acceleration. Holding $44 should see a move back toward $50, the highest volume profile for August. 

 


Like this article? Help us with some feedback by answering this survey:

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD clings to recovery gains above 1.1350 after EU inflation data

EUR/USD gained traction and climbed to its highest level in more than 10 days above 1.1360 amid the broad-based selling pressure surrounding the greenback. The data from the euro area showed that the annual CPI jumped to 4.9% in November from 4.1% in October, helping the shared currency preserve its strength.

EUR/USD News

GBP/USD advances to mid-1.3300s on renewed dollar weakness

GBP/USD gathered bullish momentum during the European trading hours and climbed to 1.3350 area as the greenback remains under selling pressure amid slumping US Treasury bond yields. Investors await FOMC Chairman Powell's testimony.

GBP/USD News

Gold eyes $1,800 and $1,806 on road to recovery

The precious metal has staged a decent comeback, as bulls look to recapture the $1,800 mark amid a revival of the Omicron covid variant fears. A flight to safety theme remains in vogue killing the demand for the yields.

Gold News

XRP price on edge of cliff as Ripple faces imminent collapse

XRP price followed the rest of the cryptocurrency market lower over the weekend. The US Thanksgiving holiday gave cryptocurrency traders and investors some early Black Friday deals, but downside risks remain.

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!

Forex MAJORS

Cryptocurrencies

Signatures