Robinhood Stock News and Forecast: HOOD soars 20% in premarket after Sam Bankman-Fried stake uncovered

Late on Thursday it came to light that crypto icon Sam Bankman-Fried (SBF) had acquired a 7.6% stake in Robinhood Markets (HOOD).  HOOD shares rose more than 20% afterhours on Thursday and are up 20.6% in the premarket at the time of writing on Friday morning at $10.32. The trading platform that was the favourite of the retail crowd during the height of the pandemic bubble of the past two years went public in July 2021. Since then the stock has lost 75% of its value despite rallying more than 100% during its first month of trading. 

Robinhood Stock News: SBF says HOOD stake only personal investment

Bankman-Fried was quick to say that his Robinhood stake was just a personal investment and not the start of a takeover attempt. Bankman-Fried spent $648 million to acquire the shares at an average price of $11.52, which means he has probably been adding to his stake for months as HOOD has traded near $8 of late. The vast majority was acquired at the Thursday close however. In total SBF owns about 56 million shares.

The investment is sizable as SBF's fortune is estimated at $21 billion but may be lower due to current crypto market mayhem. SBF founded Alameda Research and FTX, one of the world's largest crypto exchanges. Another interesting angle is that FTX is planning on releasing a stock trading platform that would compete with Robinhood, so we cannot help but take Bankman-Fried's statement with a grain of salt.

As the tweet above demonstrates, many observers are speculating that this large stake may lead to a buyout offer in the future. After all, SBF is worth somewhere around twice the value of HOOD's entire market cap. Despite being a favourite of growth stock guru Cathie Wood, or maybe because of, HOOD stock has dumped more than 55% this year as the pandemic's retail trading fury has given way to much lower trading volumes. 

Robinhood Stock Forecast: HOOD must hold above $11 to make run at $14

SBF's giant block trade, which was rumoured to cost near $480 million, came as HOOD touched its all-time low on Thursday at $7.71. This is a far cry from its IPO at $38. To keep momentum, HOOD stock needs to surpass $10.92 in the regular session on Friday. This was the range high from May 4 and 5. If it cannot close above this level, then we are afraid that HOOD may fall back to new lows. Right now HOOD is trading just below here.

If it can surpass $10.92, this would set Robinhood stock up for a run at $14. That level has acted as overhead resistance since early February. The 50-day moving average at $11.55 may also offer resistance before bulls can make it to $14. The Relative Strength Index (RSI) reading of 35 does mean it is oversold enough that it may allow for a further rally, at least until the RSI moves above 50. There is too much reticence in the market, however, for any move toward overbought territory. Support is at $10.

HOOD daily chart