Robinhood Sank After a Blowout Quarter: Rebound, or a Slide to $76?
Robinhood (HOOD) inventory closed at $89.84 on July 29, down 3.15%, slipping underneath $90 even after the corporate posted its finest quarter ever.
The drop was probably not concerning the numbers. HOOD has fallen about 14% in 5 days and roughly 20% this yr, so the weak point runs deeper than one earnings report.
HOOD Earnings Beat, however the Market Sold the News
Robinhood reported document income of $1.31 billion, up 32% from a yr earlier.
Adjusted earnings got here in at $0.62 per share, far above the roughly $0.42 that analysts anticipated.
The combine instructed the actual story. Prediction markets generated $156 million, overtaking both equities at $129 million and crypto at $100 million for the primary time.
That shift issues as a result of crypto income fell 38% yr over yr, after an even sharper crypto revenue slide in the prior quarter, but whole income nonetheless hit a document. However, the year-to-date inventory worth weak point persevered.
Robinhood now runs 13 businesses above $100 million in annual revenue, removed from its meme-broker image. One markets account mentioned Robinhood “proved it’s greater than a crypto inventory.” And that outlook is now seen within the analysts’ calls.
In the times earlier than the report, the most recent analyst calls stayed cut up however constructive. Barclays and Truist each reiterated purchase scores, with a Barclays Robinhood worth goal of $122, whereas JP. Morgan and Morgan Stanley stored maintain scores at $99 and $124.
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Each goal nonetheless sat close to or above the worth, so Wall Street was not braced for a collapse. The firm additionally stored shopping for again inventory underneath a buyback plan it authorized earlier this year.
Part of the revenue got here from a one-time acquire, which invitations some caution on earnings quality. Even so, a double beat couldn’t raise the shares.
Options Traders Are Still Hedging for Downside
Robinhood’s choices market exhibits lingering warning. The put-call ratio, which weighs bearish put bets towards bullish calls, sits close to 0.66 in open curiosity, a high studying that favors places.
The quantity ratio has climbed towards 0.60 as effectively. That rise suggests desks stored including draw back hedges across the earnings date somewhat than betting on a pop.
Hedging exhibits worry, nonetheless, and never at all times the place money is actually flowing.
Money Flow Improves as Selling Pressure Fades
Deeper knowledge hints the promoting could also be cooling. Chaikin Money Flow (CMF), a gauge of whether or not institutional cash is shopping for or promoting, reads -0.09 and tried to cross above zero round July 24.
It failed, so establishments are doubtless nonetheless internet sellers. Yet, CMF rose between July 27 and July 28 whereas the worth fell, a small bullish divergence. This exhibits that the large institutional cash is bleeding much less as in contrast to the worth. However, the CMF wants to transfer above zero for the HOOD inventory to present price-specific positivity.
Volume backs that up. Selling quantity has thinned since early July even because the inventory dropped, which means that even retail sellers are dropping steam.
None of this confirms a backside, although, so the HOOD worth chart has to settle the argument.
Robinhood Stock Price Levels That Decide the Next Move
The chart nonetheless appears to be like weak. Since June 9, Robinhood has traced a head and shoulders sample, a topping form the place a high sits between two decrease peaks, and it broke down on July 24, days earlier than earnings. The breakdown construction nonetheless stays intact, which now explains why the choices merchants lean bearish.
The breakdown has stalled at $89.87, which additionally marks the 0.786 Fibonacci retracement. If that flooring holds, the roughly 21% goal close to $76.53 might not fill, particularly after a close to 10% drop.
A maintain above $89.87 and a reclaim of $93.84 would open room again towards the analyst targets. Real energy, nonetheless, solely returns above $108.45, the correct shoulder, which appears to be like distant for now.
For now, $89.87 separates a doable rebound from a deeper slide towards $76.53.
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