Robinhood Markets (HOOD) burst into the limelight while the coronavirus infections were on the surge, and governments worldwide imposed strict lockdowns to curb its spread. Though this Fintech firm has been in existence since 2013, its popularity swelled up over the past year, reflected through a record rise in the number of retail investors on its platform.
Notably, Robinhood Markets’ monthly active user base jumped to 21.3 million at the end of Q2, compared to 10.2 million in the prior-year period. Furthermore, net cumulative funded accounts (excluding churned users and including resurrected ones) increased 130% year-over-year to 22.5 million in Q2.
While Robinhood Markets’ key performance metrics remain strong, its stock witnesses wild swings. It began trading on NASDAQ on July 29, 2021 and closed 8% below its IPO price of $38 on the day of listing. However, its price surged to $85 (52-week high) on August 4, as retail investors and Cathie Wood of ARK Investment Management piled up on Robinhood stock.
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Robinhood Markets stock, with 9.5% of investors who hold portfolios on TipRanks having increased their exposure in the last 7 days. Furthermore, insiders have been increasing their exposure to HOOD.
Despite the positives, Robinhood Markets stock has been trending lower since hitting a record high on August 4, as reflected through a 41% decline in its price from the peak. (See Robinhood Markets stock charts on TipRanks)
Nevertheless, the company recently announced stellar Q2 financials. Its top-line increased 131% year-over-year to $565 million and came ahead of the Street’s estimate of $559.9 million. The outperformance reflects strong growth in its user base and a significant increase in crypto traders on its platform.
While Robinhood Markets’ Q2 performance impressed, a decline in average revenue per user ($112 versus $115 in the prior year) and soft Q3 guidance didn’t sit well with investors. Robinhood Markets stock is down about 12% in Thursday’s pre-market, following the announcement.
Management expects seasonal headwinds and a decline in trading activities to take a toll on its Q3 revenues and new funded accounts.
Whether Robinhood Markets stock cracks further or could rise to create a new high remains a wait and watch story. However, the volatility in its stock could remain elevated, and investors should brace for wild swings in its price.
On TipRanks, HOOD is a Moderate Buy based on 2 Buys and 1 Hold. The average Robinhood Markets price target of $55 implies approximately 10.4% upside potential to current levels.
Disclosure: Amit Singh held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
