Robinhood Markets, Inc. (NASDAQ: HOOD) has been making headway since its debut back in 2015 – offering retail investors the ability to make trades with no commissions and an easy-to-use trading platform. While HOOD rose to prominence during the stock market craze in 2021, the stock was greatly impacted by the steep decline of the stock market due to the Fed’s efforts to curb inflation. However, the HOOD stock forecast could be bullish for 2023 as the current stock market rebound has re-sparked retail investors’ interest in trading. With growing expectations of a dovish Fed pivot, the HOOD stock price prediction could offer substantial upside potential for investors.
HOOD Fundamentals
Adding New Products
Despite being impacted by the bear market in 2022, HOOD has been constantly working to improve its offerings as it continues to introduce new services. Last year, HOOD extended its equities trading hours as part of its long-term goal of providing 24-hour trading. In this way, HOOD could attract additional users this year as more investors could be interested in increasing their trades to capitalize on the current stock market growth. Moreover, HOOD launched Robinhood Retirement last December as the first and only IRA with a built-in match and no employer necessary. Based on this, HOOD could be poised to attract a large number of new users and an even wider pool of assets. Given the company’s constant innovation, the HOOD stock forecast could be bright for the future as markets rebound.
In addition to expanding its equities trading offerings, HOOD introduced additional services to allow its customers to gain passive income during the inflationary macro-environment. One of these services is its stock lending program which was launched in May 2022. This program allows HOOD’s customers to generate income by lending the stocks they’re holding. With this in mind, this program has shown significant growth potential as it reached nearly $15 million of annualized revenues in Q3 – with this number rising to $30 million by the end of January. Based on this promising growth, HOOD is actively working to improve this product to improve onboarding by making more equities available to lend and migrating to a new collateral agent.
At the same time, HOOD launched a revamped Robinhood Gold service offering its customers an industry-leading 4.15% interest rate during an inflationary macro-environment. Since the company is providing its customers with access to one of the easiest opportunities to earn yield in the US, Robinhood Gold subscribers increased in Q4 for the first time in more than a year. Moreover, Gold cash sweep balances grew to $6 billion at the end of January – highlighting the success of this launch. In light of the company’s impressive services, the HOOD stock forecast could be bullish for 2023.
Venturing Into Crypto
Although HOOD is known for its equities trading platform, the company expanded into the crypto space with the launch of its global crypto platform – the non-custodial Robinhood Wallet. Considering cryptocurrencies’ dip in 2022 following the rising interest rates, this product has not provided HOOD with the expected returns. However, the Robinhood Wallet could be on track to deliver significant revenues for the company this year thanks to the rebound cryptocurrencies’ are witnessing. With cryptocurrencies more appealing to investors in the meantime, the HOOD stock price prediction could show a significant upside as the crypto sector continues to witness high volume.
Global Expansion
While many companies are pulling back from new investments due to the macro uncertainty, HOOD plans to aggressively pursue additional long-term growth opportunities. With this in mind, HOOD intends to expand its services’ reach globally by introducing brokerage services in the UK by the end of 2023. In this way, HOOD could be on track to significantly grow its assets under custody and revenues as its services gain popularity in the UK market. Given the company’s constant efforts to grow its business, the HOOD stock forecast appears to be bright in 2023 and beyond.
Share Buyback & SBC Cancellation
Meanwhile, HOOD is seeking to add value to its shareholders as the company’s BOD recently approved a buyback of the 55 million shares purchased by Sam Bankman-Fried – founder of now-bankrupt crypto exchange FTX. These shares are owned by Emergent Fidelity Technologies – a holding company Bankman-Fried used to purchase these shares – which has recently filed for bankruptcy. On that note, there is an ongoing fight regarding the control of these shares between FTX’s debtors and BlockFi – a crypto lender that announced bankruptcy following FTX’s collapse. With these shares under the custody of the Justice Department, HOOD is in talks with the DOJ to buy back these shares. If the company successfully purchases these shares back, HOOD stock could soar given the scale of this share buyback.
Moreover, HOOD’s founders decided to cancel nearly $500 million of their combined share-based compensation. As a result, HOOD’s operating costs are expected to decline by up to $50 million per quarter starting in Q2 while also reducing HOOD’s fully diluted share count by 3.5%. Based on these cost savings, the company could be on the right track to reach profitability – making the HOOD stock forecast bright for 2023.
Risks
Despite HOOD’s growth potential and promising catalysts, the company has some risks that investors should note before investing. While HOOD is a leading brokerage among retail investors, the company has been constantly reporting declining Monthly Average Users (MAUs). In December, HOOD reported 11.4 million in MAUs compared to 12.5 million in November. On a YOY basis, this decline is significantly steeper as MAUs decreased from 17.4 million in December 2021. As a result of this decline in MAUs, assets under custody fell to $62 billion – declining 11% MOM and 37% YOY. However, the current market rebound could help boost MAUs and AUC as more investors are interested in trading.
Another risk HOOD faces is the SEC potentially limiting payment for order flow. On that note, payment for order flow is a key part of HOOD’s business model since it allows the brokerage to offer free trades to retail investors. Through payment for order flow, HOOD generates most of its revenues since it sells the stock orders it receives to market makers in exchange for a fee for directing the order flow their way. However, the SEC is proposing that instead of order flow being sent to a single market maker of choice, orders would be sent to auctions where a market maker offering the best price for a trade would win the bid. As a result, demand for order flow could take a significant hit if market makers determine it is no longer profitable for their business.
Another SEC proposal includes codifying brokers’ responsibility to get their customers the best possible price on trades. In this way, brokers would have to search extensively before selling order flows which could significantly impact brokers’ operating costs. Since the bulk of HOOD’s revenues is dependent on payment for order flow, the stock could drop if payment for order flow is limited by the SEC.
Since the SEC’s proposals would limit the company’s ability to generate revenues, HOOD has been working to diversify its revenue sources to limit the impact of these proposals. In 2022, transaction-based revenue – which includes payment for order flow revenue – represented 60% of HOOD’s total revenues compared to 77% in 2021. With the company improving its options trading offering and expanding into the crypto trading sphere, the HOOD stock forecast could be promising even if the SEC limits payment for order flow.
HOOD Financials
Looking into HOOD’s 2022 financials, the company grew its assets YOY to $23.3 billion from $19.7 billion. This increase is mainly attributed to $8.4 billion reported as assets related to user cryptocurrencies safeguarding obligations. HOOD’s cash balance also increased slightly from $6.2 billion to $6.3 billion. As for liabilities, HOOD reported $16.3 billion – increasing from $12.4 billion a year ago. However, $8.4 billion of HOOD’s liabilities are related to user cryptocurrencies safeguarding obligations.
In terms of revenues, HOOD reported $380 million in Q4 – representing a 5% YOY increase from $363 million. However, on a full-year basis, HOOD’s revenues declined 25% from $1.8 billion in 2021 to $1.3 billion. Meanwhile, HOOD successfully reduced its operating costs in 2022 to $2.3 billion compared to $3.4 billion a year ago. In this way, HOOD’s net loss declined from $3.6 billion to $1 billion in 2022. Given the company’s significant cost reductions, HOOD could be on the right track to profitability as it continues to expand its services and reduce its costs.
While HOOD’s financials could be underwhelming for many investors, it is worth noting that the company lost $57 million due to a processing error. This error caused HOOD to sell shares of Cosmos Health Inc. (NASDAQ: COSM) short into the market following COSM’s 1-for-25 reverse split. Despite detecting this error quickly, HOOD still lost a substantial amount of cash as it bought back these shares against a rapidly rising stock price.
Technical Analysis
HOOD stock price is currently at $9.92 and it shows supports near 9.07 and 7.71. The stock also shows resistances near 11.11, 12.96, and its 52-week high of 16.49. Considering the current rebound the stock market is witnessing, HOOD stock ran more than 22% on a YTD basis. As the current stock market run has re-ignited investors’ interest in trading equities, the HOOD stock price prediction could be bullish since the stock could continue climbing this year. Given the company’s plans to buy back Sam Bankman-Fried’s shares and expand its brokerage services in the UK this year, the HOOD stock forecast appears to be bright.
Despite HOOD’s impressive run to start the year, the stock appears to be losing momentum after recently dropping below its 50 MA. With the stock approaching a retest of its 200 MA, bullish investors could watch for this support to hold. If the stock holds its 200 MA support, this could be a bullish sign that another run could be imminent. However, HOOD could drop near $9 if it drops below the 200 MA support. In that case, adding shares near $9 could be a profitable investment for long-term investors given HOOD’s growth potential.
Considering HOOD’s long-term growth potential, accumulation is trending upwards which could indicate that investors believe the stock could be undervalued at its current PPS. The MACD also recently turned bullish which could signal a run in the near term. The RSI is picking up and recently climbed from 35 to 40 – indicating that HOOD could be slightly oversold. In light of these indicators, HOOD could be on track to run in the near term – especially if the company provides updates regarding the buyback of Sam Bankman-Fried’s shares. HOOD has an OS of 892.7 million and a float of 518.4 million.
HOOD Forecast
With the stock market rebounding off its 2022 lows, the HOOD stock forecast could be bright as more investors are attracted to trade stocks. Considering HOOD’s efforts to expand its equities trading offerings over the past year, the brokerage’s revenues could be poised to receive a boost from the renewed interest in trading. HOOD’s expansion into the crypto space by launching Robinhood Wallet could also provide the brokerage with a major revenue source this year given the crypto rally to begin the year. As the company is currently negotiating with the DOJ to buy back the 55 million shares owned by Sam Bankman-Fried, the HOOD stock price prediction presents a significant upside once the company successfully buys these shares back. Although the company is still operating at a loss, the HOOD stock forecast could be bullish since the company appears to be on the right track to profitability.
HOOD Fundamentals
Adding New Products
Despite being impacted by the bear market in 2022, HOOD has been constantly working to improve its offerings as it continues to introduce new services. Last year, HOOD extended its equities trading hours as part of its long-term goal of providing 24-hour trading. In this way, HOOD could attract additional users this year as more investors could be interested in increasing their trades to capitalize on the current stock market growth. Moreover, HOOD launched Robinhood Retirement last December as the first and only IRA with a built-in match and no employer necessary. Based on this, HOOD could be poised to attract a large number of new users and an even wider pool of assets. Given the company’s constant innovation, the HOOD stock forecast could be bright for the future as markets rebound.
In addition to expanding its equities trading offerings, HOOD introduced additional services to allow its customers to gain passive income during the inflationary macro-environment. One of these services is its stock lending program which was launched in May 2022. This program allows HOOD’s customers to generate income by lending the stocks they’re holding. With this in mind, this program has shown significant growth potential as it reached nearly $15 million of annualized revenues in Q3 – with this number rising to $30 million by the end of January. Based on this promising growth, HOOD is actively working to improve this product to improve onboarding by making more equities available to lend and migrating to a new collateral agent.
At the same time, HOOD launched a revamped Robinhood Gold service offering its customers an industry-leading 4.15% interest rate during an inflationary macro-environment. Since the company is providing its customers with access to one of the easiest opportunities to earn yield in the US, Robinhood Gold subscribers increased in Q4 for the first time in more than a year. Moreover, Gold cash sweep balances grew to $6 billion at the end of January – highlighting the success of this launch. In light of the company’s impressive services, the HOOD stock forecast could be bullish for 2023.
Venturing Into Crypto
Although HOOD is known for its equities trading platform, the company expanded into the crypto space with the launch of its global crypto platform – the non-custodial Robinhood Wallet. Considering cryptocurrencies’ dip in 2022 following the rising interest rates, this product has not provided HOOD with the expected returns. However, the Robinhood Wallet could be on track to deliver significant revenues for the company this year thanks to the rebound cryptocurrencies’ are witnessing. With cryptocurrencies more appealing to investors in the meantime, the HOOD stock price prediction could show a significant upside as the crypto sector continues to witness high volume.
Global Expansion
While many companies are pulling back from new investments due to the macro uncertainty, HOOD plans to aggressively pursue additional long-term growth opportunities. With this in mind, HOOD intends to expand its services’ reach globally by introducing brokerage services in the UK by the end of 2023. In this way, HOOD could be on track to significantly grow its assets under custody and revenues as its services gain popularity in the UK market. Given the company’s constant efforts to grow its business, the HOOD stock forecast appears to be bright in 2023 and beyond.
Share Buyback & SBC Cancellation
Meanwhile, HOOD is seeking to add value to its shareholders as the company’s BOD recently approved a buyback of the 55 million shares purchased by Sam Bankman-Fried – founder of now-bankrupt crypto exchange FTX. These shares are owned by Emergent Fidelity Technologies – a holding company Bankman-Fried used to purchase these shares – which has recently filed for bankruptcy. On that note, there is an ongoing fight regarding the control of these shares between FTX’s debtors and BlockFi – a crypto lender that announced bankruptcy following FTX’s collapse. With these shares under the custody of the Justice Department, HOOD is in talks with the DOJ to buy back these shares. If the company successfully purchases these shares back, HOOD stock could soar given the scale of this share buyback.
Moreover, HOOD’s founders decided to cancel nearly $500 million of their combined share-based compensation. As a result, HOOD’s operating costs are expected to decline by up to $50 million per quarter starting in Q2 while also reducing HOOD’s fully diluted share count by 3.5%. Based on these cost savings, the company could be on the right track to reach profitability – making the HOOD stock forecast bright for 2023.
Risks
Despite HOOD’s growth potential and promising catalysts, the company has some risks that investors should note before investing. While HOOD is a leading brokerage among retail investors, the company has been constantly reporting declining Monthly Average Users (MAUs). In December, HOOD reported 11.4 million in MAUs compared to 12.5 million in November. On a YOY basis, this decline is significantly steeper as MAUs decreased from 17.4 million in December 2021. As a result of this decline in MAUs, assets under custody fell to $62 billion – declining 11% MOM and 37% YOY. However, the current market rebound could help boost MAUs and AUC as more investors are interested in trading.
Another risk HOOD faces is the SEC potentially limiting payment for order flow. On that note, payment for order flow is a key part of HOOD’s business model since it allows the brokerage to offer free trades to retail investors. Through payment for order flow, HOOD generates most of its revenues since it sells the stock orders it receives to market makers in exchange for a fee for directing the order flow their way. However, the SEC is proposing that instead of order flow being sent to a single market maker of choice, orders would be sent to auctions where a market maker offering the best price for a trade would win the bid. As a result, demand for order flow could take a significant hit if market makers determine it is no longer profitable for their business.
Another SEC proposal includes codifying brokers’ responsibility to get their customers the best possible price on trades. In this way, brokers would have to search extensively before selling order flows which could significantly impact brokers’ operating costs. Since the bulk of HOOD’s revenues is dependent on payment for order flow, the stock could drop if payment for order flow is limited by the SEC.
Since the SEC’s proposals would limit the company’s ability to generate revenues, HOOD has been working to diversify its revenue sources to limit the impact of these proposals. In 2022, transaction-based revenue – which includes payment for order flow revenue – represented 60% of HOOD’s total revenues compared to 77% in 2021. With the company improving its options trading offering and expanding into the crypto trading sphere, the HOOD stock forecast could be promising even if the SEC limits payment for order flow.
HOOD Financials
Looking into HOOD’s 2022 financials, the company grew its assets YOY to $23.3 billion from $19.7 billion. This increase is mainly attributed to $8.4 billion reported as assets related to user cryptocurrencies safeguarding obligations. HOOD’s cash balance also increased slightly from $6.2 billion to $6.3 billion. As for liabilities, HOOD reported $16.3 billion – increasing from $12.4 billion a year ago. However, $8.4 billion of HOOD’s liabilities are related to user cryptocurrencies safeguarding obligations.
In terms of revenues, HOOD reported $380 million in Q4 – representing a 5% YOY increase from $363 million. However, on a full-year basis, HOOD’s revenues declined 25% from $1.8 billion in 2021 to $1.3 billion. Meanwhile, HOOD successfully reduced its operating costs in 2022 to $2.3 billion compared to $3.4 billion a year ago. In this way, HOOD’s net loss declined from $3.6 billion to $1 billion in 2022. Given the company’s significant cost reductions, HOOD could be on the right track to profitability as it continues to expand its services and reduce its costs.
While HOOD’s financials could be underwhelming for many investors, it is worth noting that the company lost $57 million due to a processing error. This error caused HOOD to sell shares of Cosmos Health Inc. (NASDAQ: COSM) short into the market following COSM’s 1-for-25 reverse split. Despite detecting this error quickly, HOOD still lost a substantial amount of cash as it bought back these shares against a rapidly rising stock price.
Technical Analysis
HOOD stock price is currently at $9.92 and it shows supports near 9.07 and 7.71. The stock also shows resistances near 11.11, 12.96, and its 52-week high of 16.49. Considering the current rebound the stock market is witnessing, HOOD stock ran more than 22% on a YTD basis. As the current stock market run has re-ignited investors’ interest in trading equities, the HOOD stock price prediction could be bullish since the stock could continue climbing this year. Given the company’s plans to buy back Sam Bankman-Fried’s shares and expand its brokerage services in the UK this year, the HOOD stock forecast appears to be bright.
Despite HOOD’s impressive run to start the year, the stock appears to be losing momentum after recently dropping below its 50 MA. With the stock approaching a retest of its 200 MA, bullish investors could watch for this support to hold. If the stock holds its 200 MA support, this could be a bullish sign that another run could be imminent. However, HOOD could drop near $9 if it drops below the 200 MA support. In that case, adding shares near $9 could be a profitable investment for long-term investors given HOOD’s growth potential.
Considering HOOD’s long-term growth potential, accumulation is trending upwards which could indicate that investors believe the stock could be undervalued at its current PPS. The MACD also recently turned bullish which could signal a run in the near term. The RSI is picking up and recently climbed from 35 to 40 – indicating that HOOD could be slightly oversold. In light of these indicators, HOOD could be on track to run in the near term – especially if the company provides updates regarding the buyback of Sam Bankman-Fried’s shares. HOOD has an OS of 892.7 million and a float of 518.4 million.
HOOD Forecast
With the stock market rebounding off its 2022 lows, the HOOD stock forecast could be bright as more investors are attracted to trade stocks. Considering HOOD’s efforts to expand its equities trading offerings over the past year, the brokerage’s revenues could be poised to receive a boost from the renewed interest in trading. HOOD’s expansion into the crypto space by launching Robinhood Wallet could also provide the brokerage with a major revenue source this year given the crypto rally to begin the year. As the company is currently negotiating with the DOJ to buy back the 55 million shares owned by Sam Bankman-Fried, the HOOD stock price prediction presents a significant upside once the company successfully buys these shares back. Although the company is still operating at a loss, the HOOD stock forecast could be bullish since the company appears to be on the right track to profitability.