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why robinhood stock is falling

by Karlee Cassin Published 3 years ago Updated 2 years ago
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Shares of popular stock trading app Robinhood tumbled over 10% after the company reported fourth quarter earnings that failed to impress investors, while also issuing a grim revenue forecast for the start of 2022 as trading activity continues to slow down.Jan 27, 2022

Is Robinhood losing a lot of customers?

Monthly active users fell to 17.3 million last quarter from 18.9 million in the third quarter. Robinhood is about to face its toughest comps in the first and second quarters of 2022 following its record year in 2021 from events like the GameStop short squeeze.Jan 27, 2022

Is Robinhood stock expected to rise?

Stock Price Forecast

The 14 analysts offering 12-month price forecasts for Robinhood Markets Inc have a median target of 11.75, with a high estimate of 36.00 and a low estimate of 10.00. The median estimate represents a +26.62% increase from the last price of 9.28.

What is the problem in Robinhood?

The trading platform, which just reported billions in losses for 2021, is still contending with lawsuits, trading restrictions and regulatory scrutiny.Jan 27, 2022

Will Robinhood ever be profitable?

He said it was possible Robinhood will become profitable in 2022, but indicated 2023 was a more likely target depending on overall market conditions and the launch of new products. Robinhood enjoyed a strong run during the pandemic, with homebound investors using its app to trade stocks and other assets.Jan 27, 2022

Is Robinhood overvalued?

Shares of Robinhood Markets (NASDAQ:HOOD) are still overvalued, despite dropping 50% since the IPO date. Although the trading platform benefited from strong customer acquisition and improving monetization at the start of FY 2021, the trends have now reversed!Jan 2, 2022

Is Robinhood a good way to buy stocks?

Stock trading costs: 5 out of 5 stars

Robinhood provides 100% commission-free stock, options, ETF and cryptocurrency trades, making it attractive to investors who trade frequently. Still, these days many big-name brokers also offer free trades, so it makes sense to compare other features when picking a broker.May 3, 2022

Is Robinhood a scheme?

Robinhood is classified as a securities brokerage, which means that the firm can buy and sell different stocks on behalf its clients. Stock brokerages are authorized to fulfill the orders of clients. Traditionally, securities brokerages charge a fee per order. However, Robinhood does not charge based on the same model.Dec 21, 2021

Is fidelity better than Robinhood?

Although Robinhood is typically thought of as a beginner-friendly investing app, Fidelity actually earned the title of Best Broker for Beginning Investors and the Best App for Investing in NerdWallet's 2022 Best-Of Awards.

Did Robinhood ever get in trouble?

Robinhood is fined $70 million over misleading customers and system outages. The fine was the largest ever imposed by the Financial Industry Regulatory Authority, which is known as FINRA.Jul 21, 2021

What is the future of Robinhood?

Robinhood reported net interest revenues of $257 million for 2021, this was a 45% increase over the prior year. Investors shouldn't be surprised to see that number grow in the future as it expands its stock-lending program. The program could also increase the overall stickiness of its ecosystem.Apr 5, 2022

How many users has Robinhood lost?

Robinhood users disengage

Driving the news: Robinhood on Thursday reported that it had 17.3 million monthly active users in December 2021 — an 8% decrease from 18.9 million in September. Between the second and third quarter, Robinhood lost 11% (2.4 million) of its monthly active users.Jan 27, 2022

Can you lose money with Robinhood?

No commissions, free stocks: So is it possible to lose money with Robinhood? It is possible to lose money with Robinhood. As with any investment platform, deposits made on Robinhood are not backed by the FDIC, and there is no guarantee of positive returns.

What happened

Shares of Robinhood ( HOOD 0.87% ) sank on Thursday after the popular stock-trading platform said a group of its early investors filed to sell more than 97 million shares. At 12:15 p.m. EDT, Robinhood's stock price was down 13%.

So what

Robinhood conducted its initial public offering ( IPO) last week. After initially falling below its $38 IPO price, Robinhood's shares quickly rebounded. News that fund manager Cathie Wood had purchased shares for her closely followed ARK Invest funds helped to spark the rally.

Now what

The news that several of Robinhood's largest investors are choosing to take profits so soon after its IPO is a bit concerning.

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What happened

Shares of Robinhood Markets ( HOOD -3.59% ) pulled back in October, after the company issued a disappointing third-quarter earnings report, with revenue falling sequentially from the second quarter. According to data from S&P Global Market Intelligence, the stock finished the month down 17%.

So what

Robinhood shares dipped 10.4% on Oct. 27, after the company badly missed estimates in its third-quarter earnings report.

Now what

Analysts responded to the report by lowering their price targets, and the report, only Robinhood's second as a publicly traded company, raises doubts about the company's growth potential.

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Mixed Earnings and Poor Guidance

Commission-free broker Robinhood missed fourth-quarter earnings estimates but beat revenue estimates.

What's Next for HOOD

The CEO's talk of long-term plans to reach out to other target audiences may have pleased investors who have considered the stock too dependent on the cryptocurrencies market and its young customer base.

Why HOOD stock is falling

HOOD stock ran way ahead of its fundamentals at the peak. The rise was driven by speculative trading including rumors that the trading app might also get into the BNPL (buy-now-pay-later) market. The bullish narrative is unwinding now, which is leading to a fall in HOOD stock.

Robinhood earnings

Robinhood reported revenues of $565 million in the quarter, which were 131 percent higher than the same period in 2020. The revenues were towards the upper end of its guidance of $546 million–$574 million. The company posted a net loss of $502 million in the quarter, which was within the guidance of a loss between $487 million–$537 million.

HOOD stock forecast

Since HOOD was only recently listed, only four analysts are covering it. While analysts two rate the trading app as a buy or some equivalent, two rate the stock as a hold. Its median target price of $65 is a premium of over 30 percent above the current prices.

Should you buy or sell HOOD stock?

While Wall Street analysts have a bullish forecast for HOOD stock, I would be wary of buying the stock here. The stock could see selling pressure in the near term. Robinhood stock looked overvalued during the IPO and despite the crash, it still trades above the IPO price.

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