Robinhood stock price forecast as the smart money index retreats

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The Robinhood (NASDAQ: HOOD) stock price meltdown continued on Friday as investors reflected on the company’s slowing growth. The stock has crashed by over 15% in extended hours. As a result, it has crashed by over 87% from its all-time high, bringing its total market capitalization to less than $9 billion.

Robinhood earnings preview

Robinhood is one of the most popular companies in the United States. It is credited for disrupting the sleepy industry of stockbroking. Started in 2021, the company has revolutionized the concept of no commissions in the industry.

At its peak, Robinhood was one of the closely watched companies around the world. When it became public, the company’s market valuation quickly climbed to more than $50 billion. This jump made it more valuable than other companies like Interactive Brokers, E*Trade, and TD Ameritrade.

Recently, however, the Robinhood stock price has collapsed and investors have lost over $40 billion of value. This decline has happened as the momentum that existed in the first quarter of 2021 has faded. The performance of cryptocurrencies has also contributed.

On Thursday, Robinhood published its fourth-quarter results that missed analysts’ forecast on the top-line and the bottom line. The company lost more than $423 million in the fourth quarter after it lost an additional $1.3 billion in the previous quarter. 

It had a revenue of $362 million, which was lower than the median estimate of $370 million. Its equities division’s revenue fell by 35%. 

Most importantly, the number of active users in Robinhood also declined while its quarterly users rose by just 1%. 

Robinhood faces a difficult period going forward. With rates starting to rise, investors will focus on value companies that have earnings. Also, it will be difficult for the company to go back where it was in 2021 at the height of the meme investing craze.

Robinhood stock price forecast

The four-hour chart shows that the HOOD stock price has been in a steep decline in the past few months. As a result, the stock has dropped below the 25-day and 50-day moving averages. It has also crashed below the descending trendline shown in black.

A closer look shows that the accumulation and distribution indicator has been in a downward trend. This is a sign that the stock is still in its distribution phase. The same view is supported by the Smart Money Index (SMI). Therefore, for now, there is a likelihood that the Robinhood stock price will continue its downward trend. 

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