Robinhood Markets, Inc HOOD was trading slightly lower Tuesday as the company heads into its fourth-quarter earnings print after the close.
When Robinhood printed mixed third-quarter results on Nov. 7, the stock plunged almost 14% lower the following day before bottoming out at $7.92 mark on Nov. 9 and Nov. 16. The subsequent bounce up off that level caused Robinhood to form a bullish double bottom pattern, which caused the stock to soar 70% between Nov. 16 and Dec. 27, where Robinhood peaked at $13.51.
For that quarter, Robinhood reported a loss of 9 cents per share, beating a consensus estimate of a loss of 10 cents per share. The printed revenues of $467 million missing the $478.2-million estimate.
For the fourth quarter, analysts, on average, estimate Robinhood will report a loss of 1 cent per share on revenues of $456.81 million.
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On Jan. 18, Mizuho analyst Dan Dolev maintained a Buy rating on Robinhood and raised the price target from $14 to $15.
Cathie Wood-led ARK Investment Management has been loading up on shares of Robinhood over the last week, most recently adding 120,020 shares across two different ETFs, including its flagship ARK Innovation ETF ARKK, indicating it expects the share price of Robinhood to rise.
Traders and Investors looking to play the possible upside in Robinhood stock but with diversification may choose to take 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, the latter which holds a 2.81% weighting of Robinhood.
From a technical analysis perspective, Robinhood’s stock looks bullish heading into the event, having settled into a possible bull flag pattern above the 50-day simple moving average (SMA). 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.
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The Robinhood Chart: Robinhood opened slightly lower on Tuesday but buyers came in and bought the dip. The lower open paired with the rise higher intraday caused Robinhood to form a potential bull flag pattern on the daily chart.
- If Robinhood receives a bullish reaction to its earnings print and breaks up through the flag on higher-than-average volume, the measured move is about 15%, which suggests the stock could rise toward the $13 mark in the future. If that happens, Tuesday’s low-of-day will serve as a higher low, which will confirm a new uptrend for Robinhood.
- Bearish traders want to see Robinhood suffer a bearish reaction to the news and then for selling pressure to cause the stock to drop under the eight-day exponential moving average and the 50-day SMA. If that happens, Robinhood is likely to find at least temporary support at the 200-day SMA.
- Robinhood has seen increasing bullish volume since Feb. 6 and the relative strength index (RSI) is also forming a bull flag pattern. The stock’s RSI is measuring in at about 59%, which suggests the stock could rise further without becoming overbought.
- Robinhood has resistance above at $12.77 and at $13.95 and support below at $11.63 and at $10.56.
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