- Robinhood stock price has slumped by 55% from its highest point in October.
- The stock has slumped because of the ongoing crypto market crash.
- Technical analysis suggests that the stock will drop modestly and then rebound.
Robinhood stock price dropped sharply in the first quarter, erasing billions of dollars in value. HOOD dropped to a low of $63.60 in March, its lowest level since May 19. It has dropped by 55% from its all-time high and is the fifth laggard in the S&P 500 Index after AppLovin, CoStar, Trade Desk, and Workday. So, will it rebound or continue falling?
Robinhood Stock Price Crashed Amid Crypto Weakness
The main reason why the HOOD stock price retreated sharply recently is the ongoing crypto market weakness, which escalated in October last year after a major liquidation event.
This retreat had a major impact on its business as it has become one of the biggest players in the industry. After growing by 300% in the third quarter, its crypto volume jumped by 16% YoY. This growth was mostly driven by Bitstamp, the crypto exchange company it acquired last year.
In contrast, Robinhood’s equity notional volume jumped by 69% YoY and 10% sequentially, while its options contracts grew by 38% YoY. The two jumped to $710 billion and 659 million, respectively.
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Therefore, there is a possibility that the upcoming results will show that its business deteriorated in the first quarter as the crypto market and volume crashed.
Data compiled by Yahoo Finance shows that the upcoming revenue will come in at $1.24 billion, up by 33% YoY. Its earnings per share (EPS) is expected to come in at 50 cents, up from the previous 37 cents.
On the positive side, Robinhood’s business is being more diversified. It recently launched banking solutions through a partnership with Coastal Community Bank. This operation has already received over $1 billion in customer deposits.
Robinhood has become a major player in the prediction market, which is seeing substantial traction this year, with traders betting on most items like elections and sports.
The company is expanding its business internationally, including launching its tokenized stocks to European clients. It is also working on Robinhood Chain, which will be a layer-2 network based on Arbitrum. Also, it aims to become one of the biggest companies in the tokenization industry.
HOOD stock price has become relatively cheap compared to its historical standards, market share in the trading industry, and its modest growth. The company has a forward PE ratio of 27, lower than the five-year average of 36. By adding its profit margin of 42% and its forward revenue growth of 21%, we see that its rule-of-40 multiple of 63% makes it a bargain.
HOOD Stock Price Technical Analysis
The three-day chart shows that the Robinhood stock price has slumped in the past few months as the crypto market has crashed. This retreat also happened as investors sold the S&P 500 Index addition news.
The Average Directional Index (ADX) has risen to 40, a sign that the downtrend is continuing. Also, its Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued falling in the past few months.
Therefore, these technicals suggest that the Robinhood stock price will continue falling in the near term, potentially to the key support level at $30, its lowest level in April last year. It will then bounce back, possibly to $100 later this year.
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