Grave Current-Quarter Warning Sends Robinhood Stock to New Lows

The post-earnings plummet has traders in a frenzy

Deputy Editor
Jan 28, 2022 at 10:36 AM
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The shares of Robinhood Markets Inc (NASDAQ:HOOD) are off 0.9% to trade at $11.51, after opening down 13.7% at $10.02 -- their lowest level since going public last July. This dip follows a grave warning issued alongside the company's earnings report.

The fintech name reported a wider-than-expected fourth-quarter loss of 49 cents per share, on $362.71 million in revenue, which came in just above estimates. Robinhood shared a profit of $0.01 per share just a year earlier, while the company's costs have more than doubled. The commission-free brokerage cautioned that things could get even uglier, projecting a 35% year-over-year drop in revenue for its current quarter. 

The post-earnings plummet has several facets of the trading sphere going wild. The stock is trending on Stocktwits and Reddit -- the websites that helped make it a star last year -- while members of the brokerage bunch are chiming in as well. No less than five analysts slashed their price targets, the lowest coming from J.P. Morgan Securities to $11 from $17. 

More price-target cuts and/or downgrades could be on the way. The 12-month consensus price target of $27.63 is a 161.5% premium to current levels. Plus, five of the 11 in coverage consider HOOD a "strong buy," compared to four "hold" ratings, and two "sell" or worse ratings. 

Short sellers have also been responding to HOOD's now 37.6% year-to-date deficit. Short interest rose 33.8% in the last two reporting periods. The 38.84 million shares sold short make up 5.8% of stock's available float, or two-and-a-half days at its average daily pace of trading. It's also worth noting that the equity is on the Short-Sale Restricted (SSR) list today. 

We'd be remiss not to mention today's options activity, which is also firing on all cylinders. Within the first hour of trading alone, 57,000 calls an 97,000 puts have exchanged hands, which is five times the intraday average, with volume pacing for the top percentile of its annual range. The most popular contract is the weekly 1/28 10-strike put, followed distantly by the weekly 2/4 10.50-strike put, with positions being opened at both. 

 

 




 
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