- Robinhood stock price has dropped sharply from its all-time high.
- The stock has formed a falling wedge pattern, pointing to a rebound.
- There are signs that the stock will rebound in the coming weeks.
Robinhood stock price has plunged in the past few months, dropping from the year-to-date high of $153 in October last year to the current $69. This retreat may be about to end soon as it has formed a falling wedge pattern on the three-day chart.
Robinhood Stock Price Prediction: Technical Analysis
The three-day chart shows that the HOOD stock has crashed in the past few months as the crypto winter continued. It has dropped below the 50-day and 100-day Exponential Moving Averages (EMA), which are about to form a bearish crossover.
The Relative Strength Index (RSI) and the MACD indicators have continued to fall over the past few months. The RSI is nearing the oversold level of 30.
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On the positive side, the stock has formed a large bullish pennant pattern, consisting of two descending, converging trendlines that are nearing confluence. This pattern means the stock will likely bounce back later this year, potentially to the key resistance level at $100, which is about 45% above the current level.
HOOD Stock Has Bullish Catalysts Despite Crypto Headwinds
Robinhood’s stock price has dropped in the past few months as the crypto market crash continued, with Bitcoin’s price falling to $70,000 from the record high of $126,300. This crash has led to a significant drop in volume in centralized and decentralized exchanges, a move that will impact Robinhood.
Still on the positive side, the company has more bullish catalysts this year. The most important one is that the stock market experienced substantial volatility in Q1, which will boost its options business.
Robinhood has also launched more products that will continue boosting its revenue growth. For example, it launched a wealth management solution that has accumulated over $1 billion in assets in the past few months.
Also, the company launched top solutions such as a premium platinum credit card and tokenized assets, and recently partnered with the US government on its Trump Cards product.
Wall Street analysts are highly optimistic about the upcoming earnings, expecting revenue to rise by 25% to $1.16 billion. Its annual revenue is expected to come in at $5.26 billion, up by 17% YoY.
The company has also become highly undervalued, with its forward price-to-earnings ratio falling to 28, down from the five-year average of 36. This multiple is also lower than that of other companies like SoFi and Interactive Investors.
The low valuation explains why management recently announced a $1.5 billion share buyback. This program will help boost its EPS in the coming quarters as the number of outstanding shares drops.
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