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Robinhood stock price forecast: what next for HOOD after weak earnings?

Robinhood stock price forecast: what next for HOOD after weak earnings?

Last updated 12th Apr 2022
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The Robinhood stock price crashed by more than 10% in premarket trading as investors reacted to the company’s weak earnings. The HOOD stock price is trading at $35, which is lower than its Tuesday’s close of $40. This drop brings its total market capitalization to more than $30 billion.

HOOD earnings review

Robinhood has revolutionized the financial market. Launched in 2012, it became the first company to offer free stock trading. As a result, two years ago, companies like Schwab and TD Ameritrade announced that they would also embrace the no-commissions model. At the same time, Morgan Stanley decided to buy E*Trade while Schwab acquired TD Ameritrade.

Robinhood Markets went public early this year. While the HOOD stock price had a lot of hype when it went public, it has disappointed earlier investors. For one, it has crashed by almost 60% and become one of the worst-performing fintech companies.

On Wednesday, Robinhood announced weak earnings and guidance. The company reported that it had more than 22.4 million funded accounts. This was about 97% from the same quarter in 2020. It added just 660k customers in the quarter, bringing its total YTD additions to 11.4 million. The addition was significantly lower than what analysts were expecting.

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In total, Robinhood made more than $365 million in the third quarter. This was about 35% higher than where it was in the same quarter last year. This growth was driven by transaction revenue, which rose to $267 million. 

Equities revenue dropped by 27% as volatility declined in the third quarter. Options rose to $164 million while cryptocurrencies dropped to $51 million. The firm has more than $95.4 billion in administration.

Therefore, the Robinhood stock price crashed because analysts expect that its business will see more weakness in the coming months. Indeed, the company lowered its forward guidance to a revenue of $325 million. It expects that its full-year revenue will be lower than $1 billion.

Robinhood stock price forecast

Robinhood stock price

The four-hour chart shows that the HOOD stock price has been in a deep sell-off lately. The stock has crashed from an all-time high of $84.25 to today’s low of $30. As it slipped in the premarket session, the stock managed to move below the key support at $39.27, which was the lowest level on September 14th. 

It has also moved below the short and longer-term moving averages. Therefore, the stock will likely keep dropping as bears target the next key support at $25. Still, we can’t rule out a comeback later this year as the negative news fade.

Crispus Nyaga

Crispus Nyaga

Crispus is a financial analyst with over 9 years in the industry. He covers cryptocurrencies, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.