Popular market trading fintech Robinhood NASDAQ: HOOD stock collapsed to $9.94 after peaking at $85 after its much anticipated IPO debut. Robinhood was instrumental in ushering in the age of zero-commission trading. However, it also brought on scrutiny in the controversial practices of order flow arrangements. Retail trading exploded during the pandemic as the home gamers traded the markets on its convenient gamified mobile app as short squeezes in meme stocks sucked in numerous newbies and beginners. As markets have sold off and momentum stocks reversed course as the era of monetary tightening approaches, the question is whether Robinhood will continue to lose momentum. The Company missed its estimates and lowered guidance for 2022 in the face of impending interest rate hikes. Shares are arguably fallen to bargain levels. With over 22 million accounts still growing, speculation of a takeover of merger tends to rise as shares fall. The Company has set the bar low for 2022. Prudent investors seeking exposure and continued growth in the retail and crypto trading segment can watch for opportunistic pullbacks in shares of Robinhood.
Q4 2021 Earnings Release
On Jan. 27, 2022, Robinhood released fiscal Q4 2021 results for the quarter ending in December 2021. The Company reported GAAP earnings per share (EPS) losses of (-$0.49) versus (-$0.44) consensus analyst estimates, missing by (-$0.05). Revenues grew 14.2% year-over-year (YoY) to $362.7 million, missing analyst estimates for $366.64 million. Monthly active users (MAUs) rose 48% YoY to 17.3 million in December 2021. Average revenue per users (ARPU) fell (-39%) to $64 per year, compared to $106 in Q4 2020.
Downside Guidance
Robinhood lowered its guidance for fiscal Q1 2022 revenues to be under $340 million falling short of the $438.7 million consensus analyst estimates resulting in approximately (-35%) YoY revenue decline. The Company expects operating expenses to increase 15% to 20% YoY while share based compensation declines (-35%) to (-40%).
Conference Call Takeaways
Robinhood CEO Vlad Tenev set the tone underscoring the growth with 10 million new funded accounts and $1.8 billion net revenues for full-year 2021. The Company has been investing in improving the platform by bolstering its education and adding 24x7 live phone support. The Company completed its acquisition of Say Technologies and doubled its workforce in segments of engineering, product, compliance, and customer service. More than half of the newly funded accounts are beginners new to trading. The Company added many new features to help educate and acclimate them including first trade recommendations and diversified ETF portfolios based on investment goals and risk profiles. The Company added two new venues for stock trades which adds competition for customer trades and improves capacity to handle volume surges. Robinhood continues to invest in its crypto platform with beta crypto wallets and gifting capabilities. CEO Tenev assured, “We continue to hear from customers that they want us to list more coins. We've been proactively engaging with regulators on this. They are expressing concerns about cryptocurrency platforms, adding coins that the regulators believe are unregistered securities and they are watching the space closely. That said we have robot us coin listing protocols in place. We're comfortable with how we've analyzed the coins currently on our platform, we have invested in the technology that will allow us to seamlessly add more coins, and we intend to add more coins going forward.”
HOOD Opportunistic Pullback Levels
Using the rifle charts on weekly and daily time frames provides a precision view of the landscape for HOOD stock. The weekly rifle bounce attempts peaked near the $18.75 Fibonacci (fib) level. Shares continued to sell-off to $9.94 before bouncing. The weekly rifle chart is attempting to base as the 5-period moving average (MA) starts to flatten at $13.92 while 15-period MA still falls at the $20.83 fib area. The weekly stochastic is still under the 20-band but has finally crossed up as it approaches the 10-band. The weekly market structure low (MSL) buy triggers above $15.33. The daily rifle chart uptrend is stalling as the 5-period MA is sloping lower at $13.98 with the 15-period MA at $13.52. The daily stochastic is attempting a third mini pup on this oscillation under the 80-band. If the daily stochastic crosses down, then look for a breakdown towards the daily lower Bollinger Bands (BBs) at $11.33. Prudent investors can look for opportunistic pullback levels at the $11.95 fib, $11.15, $10.50, $9.94 fib, $8.63 fib, and the $7.62 fib. Upside trajectories range from the $16.67 fib level up towards the $25.55 fib level.
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