Trading Strategies for Robinhood Stock Before And After Q4 Earnings

Robinhood Markets, Inc HOOD is set to print its fourth-quarter earnings after the markets close Wednesday. The stock was trading slightly lower heading into the event in continued consolidation.

When Robinhood printed a third-quarter earnings beat on Nov. 2, the stock gapped up higher the following day before retracing to close almost flat.

For the third quarter, Robinhood reported a loss of 20 cents per share, beating a consensus estimate of a loss of 31 cents per share. The trading platform also beat on revenues, posting $361 million, which bested a $355.27-million consensus estimate.

For the fourth quarter, analysts, on average, estimate Robinhood will report a loss of 14 cents per share on revenues of $397.1 million.

On Jan. 11, Morgan Stanley analyst Michael Cyprys maintained an Equal-weight rating on Robinhood and cut the price target from $13 to $12.

Traders and investors will be watching closely to see if Robinhood was able to bring customers back to its platform after losing 1.8 million monthly active users in the third quarter.

From a technical analysis perspective, Robinhood’s stock looks bullish heading into the event, having settled into a possible bull flag pattern near the upper trendline of a rising channel. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

See Also: Robinhood Raises Interest Rates To 4.15% On $1.5M FDIC Insured Funds: 'We're Leveling The Playing Field For Investors'

The Robinhood Chart: Robinhood reversed into a steep uptrend on Dec. 28 and regained the 200-day simple moving average on Jan. 23, where the stock stalled for a few trading days before soaring higher. On Feb. 2, Robinhood topped out at $11.52 and started to consolidate.

The uptrend paired with the consolidation has settled Robinhood into a bull flag pattern on the daily chart. If the stock breaks up from the pattern following its earnings print, the measured move is about 50%, which suggests Robinhood could eventually surge toward $15.

Robinhood’s most recent higher low within its uptrend pattern was printed on Tuesday at $10.22. If the stock suffers a bearish reaction to earnings and falls under that area, the uptrend will be negated and a downtrend could occur.

Robinhood has resistance above at $11.63 and $12.77 and support below at $10.10 and $8.99.

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