HOOD Stock Forecast as Robinhood Launches New Buyback

HOOD stock price has crashed in the past few months. This makes it the third-worst performer in the S&P 500 Index this year after The Trade Desk and Fair Isaac. It has dropped by 40% this year and by 53% from its all-time high.

Robinhood Stock Price Jumps After Share Buyback

The ongoing HOOD stock price crash has made the company highly undervalued. This explains why the company launched a new $1.5 billion share repurchase on Wednesday.

Several valuation multiples show that the company is highly undervalued. For example, the company has a forward revenue metric of nearly 28% and a net income margin of 42%.

Therefore, adding the revenue growth and its profit margin brings the total amount to 70%. That’s higher than the Rule-of-40 metric of 40.

Meanwhile, the company has a forward earnings multiple of 27. It’s much lower than the five-year average of 36. This multiple is slightly higher than the S&P 500 Index’s average of 23. However, it is highly understandable as the company has higher revenue and profitability growth.

Therefore, these metrics likely explain why the company decided to announce a $1.5 billion share buyback. This will reduce the number of its outstanding shares, which have been rising in the past few years. Its share count has risen to 790 million, up from 745 million in December 2023.

Robinhood Business Has Major Catalysts

One major reason why the HOOD stock has crashed is the ongoing crypto market crash. This has affected Bitcoin and most altcoins. Bitcoin has already dropped from the all-time high of $126,300 to $72,000 today.

Robinhood’s business is affected by a weakness in the crypto market because of its huge business. That includes Bitstamp, a company it acquired last year.

Crypto exchanges face weak revenues during strong price declines. Falling prices reduce investor activity and trading volumes. Still, on the positive side, the company has more catalysts that will push the stock higher in the coming weeks or months.

One major catalyst is that Robinhood has diversified its business over the years. In addition to offering stock trading, the company has become a big player in the options market.

These businesses indicate that the company is seeing more trading activity amid the ongoing Iran war, which has fueled volatility.

Robinhood has also expanded its business to the booming prediction market, which is handling billions of dollars in volume a week. It is also expanding its business into other businesses, including real-world asset tokenization.

All these initiatives will help the company continue its growth momentum. Its most recent results revealed that the revenue jumped by 27% YoY to over $1.23 billion, while its net income nearly doubled to $605 million.

The company anticipates that its annual revenue will jump by 20% this year to $5.42 billion, followed by $6.3 billion next year.

HOOD Stock Price Prediction: Technical Analysis

The three-day chart shows that the HOOD stock price has plunged this year. It has dropped from a high of $154 in October last year to $70 today.

The stock has dropped below the 50% Fibonacci Retracement level at $80. It is also hovering near the key support level at $68, its lowest level this year.

The stock has tumbled below all moving averages and the Strong, Pivot, and Reverse levels of the Murrey Math Lines tool.

Therefore, the Robinhood stock price will continue falling in the near term, potentially to the Ultimate Support level at $50.

On the positive side, the company has strong fundamentals, which may help to offset the technicals. If this happens, the stock will bounce back later this year.