Robinhood (HOOD) is a disruptive financial technology company that provides a platform where users can buy cryptocurrencies, stocks, exchange traded funds (ETF), and options. It is used by over 11 million customers in the US, and is now expanding its business globally.
Robinhood’s business model disrupted an entire business since it introduced commission-free brokerage solutions. As a result, other firms in the industry like Schwab, TD Ameritrade, and Interactive Brokers were forced to slash their fees.
Robinhood makes most of its money from Payment for Order Flow (POPF), where it receives funds from market makers like Citadel, Virtu Financial, and Susquehanna. It also makes money from custody and other subscription services.
Robinhood’s main competitive advantage is its zero fees and the fact that its brand is well-known. As a result, these advantages helps it to beat other newer competitors like Futu Holdings’ MooMoo and WeBull.
HOOD stock was trading at $32 on November 14, while its HypeIndex figure was 120%.
Positive hype
Robinhood’s positive hype has jumped because of the ongoing stock surge since it has risen by over 330% from its lowest level in 2023. It has constantly remained above the 50-day and 200-day moving averages, pointing to potential gains ahead.
The company’s positive hype has happened as American stocks and cryptocurrencies continue their uptrend. The Nasdaq 100, S&P 500, Bitcoin have all jumped to a record high, which will lead to more users on its platform.
Robinhood’s business is doing well, with its quarterly revenue surging by 36% last quarter to over $637 million. Most of this revenue was from transactions, followed by net interest income and Gold subscription. Its gold members jumped to over 2.2 million.
Robinhood’s total assets under custody jumped by 76% to over $152.2 billion, helped by higher crypto prices.
The company is also repurchasing its shares, a move that has boosted its earnings per share (EPS). It is repurchasing shares worth $1 billion through the next three years.
The company is improving its business, especially through its Robinhood Legend, a browser-based platform for active traders.
The HOOD stock price is trading below the average analysts' forecasts. Some of the most bullish analysts are from JMP Securities, Deutsche Bank, and Goldman Sachs.
The company will benefit from the new Trump administration that has pledged to focus on deregulation. Biden’s SEC wanted to end the payment for order flow strategy.
Negative hype
There are signs that Robinhood is severely overvalued since it trades at a forward P/E of 46, higher than the sector median of 13.
It is facing substantial competition from companies like WeBull and MooMoo that are growing their market share in the United States.
Robinhood’s growth could start slowing down in the coming quarters if the stock and crypto market pull back.
Robinhood stock price analysis
The weekly chart shows that the HOOD stock price has been in a strong bull run in the past few months. It has formed a double-bottom pattern at $7.30. In technical analysis, this is one of the most bullish patterns in the market.
The stock has remained above the 50-week and 25-week Exponential Moving Averages (EMA), meaning that bulls are in control. Most importantly, it has formed a rounded bottom pattern, a popular bullish sign in the market.
Therefore, the stock will likely continue its uptrend, with the next point to watch being at $46, the 50% Fibonacci Retracement level, which is about 45% above the current level.
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