Robinhood-HOOD
If you thought things couldn’t get much worse for Robinhood stock, think again, JP Morgan just issued the retail broker’s first sell rating. The bank forecasts Robinhood (NASDAQ: HOOD) will finish the year back at the lows, predicting slow user growth and increasing supply could drive the price down to $35 by year-end.
Not long after Robinhood made its ill-received Nasdaq debut at $38.00 on July 29th, things started to get interesting. By August 5th, Robinhood stock exploded 125% and was changing hands above $70.00. However, ever since, HOOD has performed horribly, and at yesterday’s closing price of $42.08, had given back over 50%. A trend that JP Morgan warns will continue for the rest of the year. The bank highlights two reasons for their underweight stance. Firstly, user growth has fallen off a cliff in the last few months. Since the second quarter, daily active users have dropped 40%, and app downloads are down 78%. Secondly, JPM warns that the end of the early investor lock-up period will lead to selling pressure.
Because Robinhood has only traded for three months, the 2-hour price chart doesn’t produce a compelling argument either way, although, it does highlight Robinhood stock’s poor performance. However, the price does appear to be finding support between $38.00-$39.00 and on that basis, if HOOD loses this level, it could encounter selling.
If Robinhood trades below its $38.00 IPO price, it should extend towards JPM’s $35.00 target. Furthermore, if the broader equity weakness persists, an argument can be made for a trip to the $33.29 lifetime low. However, if the stock clears the 23rd of September high at $47.79, it will invalidate the bearish thesis.
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