Are Smart Investors Making the Right Decision? Robinhood Markets Inc. (HOOD)

Robinhood Markets Inc. (NASDAQ: HOOD) stock jumped 2.10% on Friday to $9.23 against a previous-day closing price of $9.04. With 10.94 million shares changed hands, the volume of the stock remained lighter than its average volume of 18.73 million shares. During the session, the Software – Infrastructure company that operates in wider Technology sector, reached to the highest price of $9.32 whereas the lowest price it dropped to was $8.81. The 52-week range on HOOD shows that it touched its highest point at $85.00 and its lowest point at $6.81 during that stretch. It currently has a 1-year price target of $11.43.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of HOOD was up-trending over the past week, with a rise of 9.49%, but this was up by 12.84% over a month. Three-month performance dropped to -11.93% while six-month performance fell -34.77%. The stock lost -75.50% in the past year, while it has lost -48.03% so far this year. A look at the trailing 12-month EPS for HOOD yields -3.11 with Next year EPS estimates of -0.94. For the next quarter, that number is -0.37. This implies an EPS growth rate of 80.80% for this year and 54.90% for next year.

Float and Shares Shorts:

At present, 867.77 million HOOD shares are outstanding with a float of 554.92 million shares on hand for trading. On Jul 14, 2022, short shares totaled 45.09 million, which was 5.17% higher than short shares on Jun 14, 2022. In addition to Mr. Vladimir Tenev as the firm’s Co-Founder, Pres, CEO & Chairman, Mr. Baiju Prafulkumar Bhatt serves as its Co-Founder, Chief Creative Officer & Director.

Institutional Ownership:

Through their ownership of 72.25% of HOOD’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 22.23% of HOOD, in contrast to 14.57% held by mutual funds. Shares owned by individuals account for 13.55%. As the largest shareholder in HOOD with 5.38% of the stake, The Vanguard Group, Inc. holds 40,044,276 shares worth 40,044,276. A second-largest stockholder of HOOD, ARK Investment Management LLC, holds 33,556,789 shares, controlling over 4.51% of the firm’s shares. Nikko Asset Management Co., Ltd. is the third largest shareholder in HOOD, holding 23,400,520 shares or 3.15% stake. With a 2.96% stake in HOOD, the ARK Innovation ETF is the largest stakeholder. A total of 22,012,219 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.35% of HOOD stock, is the second-largest Mutual Fund holder. It holds 17,513,698 shares valued at 143.96 million. Vanguard Small Cap Index Fund holds 2.02% of the stake in HOOD, owning 15,036,231 shares worth 123.6 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2022, HOOD reported revenue of $299.00M and operating income of -$379.00M. It generated -$392.00M net income for the quarter, which came to -$2.63B over the last twelve months. The EBITDA in the recently reported quarter was -$355.00M and diluted EPS was -$0.45. EBITDA for the full year was -$1.98B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for HOOD since 14 analysts follow the stock currently. There are 4 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 7 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 2 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With HOOD analysts setting a high price target of $28.00 and a low target of $5.00, the average target price over the next 12 months is $11.19. Based on these targets, HOOD could surge 203.36% to reach the target high and fall by -45.83% to reach the target low. Reaching the average price target will result in a growth of 21.24% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. HOOD will report FY 2022 earnings on 01/26/2023. Analysts have provided yearly estimates in a range of -$0.40 being high and -$1.70 being low. For HOOD, this leads to a yearly average estimate of -$1.25. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Robinhood Markets Inc. reported -$0.34 EPS against a consensus estimate of -$0.34. The surprise factor in the prior quarter was -$0.07. Based on analyst estimates, the high estimate for the next quarter is -$0.09 and the low estimate is -$0.45. The average estimate for the next quarter is thus -$0.32.

Summary of Insider Activity:

Insiders traded HOOD stock several times over the past three months with 15 Buys and 12 Sells. In these transactions, 456,589 shares were bought while 296,185 shares were sold. The number of buy transactions has increased to 141 while that of sell transactions has risen to 136 over the past year. The total number of shares bought during that period was 11,835,513 while 313,165,848 shares were sold.

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