Robinhood Markets, Inc HOOD observed a slight decrease in trading on Tuesday as the company approaches its fourth-quarter earnings report.
Following its mixed third-quarter results on Nov. 7, Robinhood stock experienced a nearly 14% decline the subsequent day before hitting a low of $7.92 on Nov. 9 and Nov. 16. However, the stock then rallied, forming a bullish double bottom pattern and surging 70% between Nov. 16 and Dec. 27, reaching a peak of $13.51.
In the third quarter, Robinhood reported a loss of 9 cents per share, surpassing the consensus estimate of a 10-cent loss. However, its revenues of $467 million fell short of the $478.2-million estimate.
For the upcoming fourth quarter, analysts are projecting a loss of 1 cent per share on revenues of $456.81 million, on average.
On Jan. 18, Mizuho analyst Dan Dolev upheld a Buy rating on Robinhood and raised the price target from $14 to $15.
The Cathie Wood-led ARK Investment Management has been actively acquiring shares of Robinhood, recently adding 120,020 shares across two different ETFs, including its flagship ARK Innovation ETF ARKK, signaling confidence in a potential rise in Robinhood’s share price.
Traders and investors seeking to capitalize on a potential upswing in Robinhood stock while diversifying their portfolio may consider taking a position in the AXS 2X Innovation ETF TARK. TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of ARKK, which holds a 2.81% weighting of Robinhood.
From a technical analysis perspective, Robinhood’s stock appears bullish ahead of the earnings report, settling into a potential bull flag pattern above the 50-day simple moving average (SMA). It should be noted that holding stocks or options through an earnings announcement is akin to gambling as stock prices can react unexpectedly.
The Robinhood chart indicates that the stock opened slightly lower on Tuesday but rebounded as buyers stepped in, potentially forming a bull flag pattern on the daily chart.
- If Robinhood responds positively to its earnings report and breaks through the flag on higher-than-average volume, the measured move suggests a potential 15% increase, indicating the stock could rise towards the $13 mark, establishing a new uptrend if Tuesday’s low serves as a higher low.
- Bearish traders are looking for a negative reaction to the earnings news, causing the stock to drop below the eight-day exponential moving average and the 50-day SMA. Should this occur, the stock is likely to find at least temporary support at the 200-day SMA.
- Robinhood has seen a rise in bullish volume since Feb. 6, and the relative strength index (RSI) is also forming a bull flag pattern. With the stock’s RSI measuring around 59%, there is a potential for further upward movement without becoming overbought.
- Resistance for Robinhood is anticipated at $12.77 and $13.95, while support is expected at $11.63 and $10.56.
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