Robinhood Aims Higher Amid SpaceX Takeoff
Here’s my plan for this financial services play after it saw more than 44,000 new downloads as SpaceX went public.
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The shares of commission-free online retail financial services company Robinhood Markets (HOOD) had been scraping along closer to the bottom of the stock’s year-long chart than the top for months. Then conditions for the shares started to improve over the past couple of months. As the SpaceX (SPCX) IPO approached, and, as it was eventually learned, that Robinhood would be involved on the retail side of the deal, the share price perked up.
Last Friday, the day that SpaceX actually went public, according to Apptopia, the Robinhood app saw 44,259 new downloads. Total sessions on Friday hit 27 million, which was a third higher than any single day visible on Robinhood’s baseline. Among 18- to 25-year-olds, Robinhood users ran 7.6 sessions per active device on Friday, up 109% from the app’s six-week norm. Now, with SPCX still trading wildly and trading higher several days after that event, users are likely looking forward to the IPOs later this year of AI companies like Anthropic and OpenAI.
Layoffs
This morning, Robinhood Markets filed a Form 8-K with the Securities and Exchange Commission announcing that the company would be reducing full-time headcount by approximately 10% (about 290 employees) and will also involve the closure of a number of open roles across the company.
“The company is taking this action from a position of business strength, including June month-to-date average daily trading volumes at record levels across equities, options, and prediction markets,” according to the filing.
Robinhood is now expecting to record cash restructuring and related charges of roughly $20 million related to employee severance and benefits costs, as well as about $8 million related to share-based compensation. Those charges are expected to be recognized when Robinhood reports its second quarter financial results in late July. Wall Street appears to support the reduction in overhead.
An Odd Twist
Analyst Benjamin Budish of Barclays on Monday reiterated his “Buy” rating on HOOD, but with an $82 target price. The odd part is that on Monday, HOOD closed at $98.12 and is trading higher than that on Tuesday. Budish is rated at just shy of five stars out of five at TipRanks. Over the past two years, his picks have generated an average return of 18.1% while he has run up a 53% success rate.
The Charts
At first glance, I see on the daily chart of HOOD, two triangle patterns, which foretell volatility. Both produced significant moves.
I just like the way this looks. Now to the important part of my analysis:
I now see the shares of HOOD building a “cup” pattern, which is bullish. The shares are approaching their 200-day simple moving average close to $103. A take and hold of that spot could possibly generate enough upside algorithmic momentum to complete the pattern. Then we’ll find out if the stock will add a handle or not. At the moment, the pivot (other than the 200-day SMA) for the pattern is the left side apex of the cup at $147. That’s a little rich for me as a pivot, but realistically, the 200-day line could produce a target above $125. Both relative strength and the daily moving average convergence divergence are pastured quite bullishly at this point. If one has the room in their portfolio, this could be a good small to mid-sized long position.
At the time of publication, Guilfoyle had no position in any security mentioned.
