Robinhood Stock Sinks After Warning Spooks Traders

The online brokerage name just made its earnings debut

Deputy Editor
Aug 19, 2021 at 11:19 AM
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Robinhood Markets Inc (NASDAQ:HOOD) just made its earnings debut as a publically traded company, but it looks as though investors are brushing off a second-quarter profit beat, as well as a 131% year-over-year surge in revenue, after the company warned its growth could soon turn sluggish. The financial services name added that a slowdown in trading activity in the current quarter -- especially among retail traders -- could impact revenue, which got a massive boost in the second quarter thanks to a cryptocurrency frenzy. In particular, Dogecoin was a major contributor to HOOD's revenue growth.

Robinhood also said it's not planning on selling any news shares as a way to capitalize on its early August surge. CFO Jason Warnick added in an interview with Kate Rooney on CNBC's Squawk Box that it didn't resonate with him "to call Robinhood a meme stock," despite its close ties to the extremely popular (and volatile) phenomenon.

Options volume on Robinhood stock, which has already been neck-and-neck with much more established names, is running even higher today. So far, 78,000 calls and 50,000 puts have exchanged hands -- 1.5 times what's typically seen at this point. The most popular position in the August 45 put, followed by the 50 call in the same series. 

With the stock down 9.6% at $45.03 at last check, this suggests these traders are split on which direction HOOD will take by the time these contracts expire tomorrow. A closer look at the charts shows that while the stock is still trading above its first close at $34.82, it's now nearly halved from its Aug. 4 record high of $85, with additional pressure coming from the newly formed 10-day moving average.

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