- Robinhood stock price has formed bearish technicals.
- It has formed a bearish flag pattern, pointing to a drop to $50.
- Its fundamentals, including rising revenues, are highly supportive.
Robinhood stock price remained unchanged this week despite some notable highly bullish catalysts. HOOD was trading at $75 on Wednesday, inside a range it has been stuck at in the past few days. This price is about 51% below its highest point last year. It has formed a risky pattern, pointing to further downside.
Robinhood Stock Price Chart Signals Further Downside
The weekly chart shows that the HOOD stock price has slumped in the past few months. This retreat has seen it erase some of the gains made last year when it was added in the S&P 500 Index.
The chart shows that the stock has dropped below the 50% Fibonacci Retracement level at $80. This Fibonacci is drawn by connecting the lowest and highest levels on record.
The stock has now formed a bearish flag pattern. This pattern is comprised of a vertical line and some consolidation. In most cases, this pattern often leads to a strong bearish breakout over time.
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It has moved below the Major S&R Pivot Point of the Murrey Math Lines tool and the 50-week and 100-week Exponential Moving Averages (EMA). Therefore, the stock will likely have a strong bearish breakout, potentially to the Strong, Pivot, and Reverse level of the Murrey Math Lines at $50.
On the other hand, a rebound above the key resistance level at $100 will invalidate the bearish outlook.
Robinhood’s Business is Doing Well
While the HOOD stock price forecast is bearish, the company has some solid fundamentals, helped by its innovation. For example, the company launched Social, a product that makes it possible for users to track and copy other traders.
The company has also made a banking push, with its newly launched solution attracting over $1 billion in deposits in less than four months. Most recently, it launched a platinum card, which costs $650 a year and competes with those issued by companies like JPMorgan and American Express.
Additionally, the company will likely benefit from the ongoing stabilization of crypto prices. Bitcoin price has jumped by about 20% from its lowest level this year. Other top altcoins like Solana and XRP have also risen, while spot ETF inflows have continued rising.
Broadly, analysts expect that Robinhood’s business will continue rising this year. Its revenue is expected to jump by 35% this quarter to over $1.25 billion, with the most optimistic analyst seeing it rising to $1.4 billion. The annual revenue is expected to jump by 22% to $5.45 billion.
The company has become a bargain compared to where it was trading at last year. Its forward price-to-earnings (PE) ratio moved to 30.65, down substantially from last year’s high of over 60. The Rule-of-40 metric shows that it is cheap, with the net income margin of 41% and a forward revenue growth of 22%, giving it a multiple of 63%.
Therefore, there are signs that technicals and fundamentals are sending mixed signals. While technicals recommend shorting the company, fundamentals mean that it has more upside to go. In this case, chances are that technicals will prevail initially and then the stock will rebound afterwards.
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