Robinhood stock price will be in the spotlight this week as the blue-chip company publishes its financial results. HOOD jumped to over 2.5% in the premarket session, up by over 268% from its lowest level in April, and its market capitalization hit $95 billion.
Robinood earnings ahead
Wall Street analysts are highly optimistic about Robinhood’s performance, with the average revenue estimate being $913 million, up by 33% from what it made last year. That surge will be driven by the relatively high volume in the stock market during the quarter.
The revenue growth will also be because of its acquisition of Bitstamp, a major player in the crypto industry. Analysts believe that the company will also issue a bullish forward estimate, with the third-quarter revenue expected to be $930 million, up by 46% from a year earlier.
Robinood’s profitability is also expected to be strong. The average estimate among four analysts is that its earnings per share (EPS) will be $0.35, up from $0.3, while the third-quarter figure will be 35 cents.
Robinhood’s annual revenue will be $3.76 billion this year and $4.5 billion in the next financial year.
Still, there are signs that HOOD is priced to perfection ahead of its earnings, meaning that it needs to publish strong financial results and forward guidance. For one, the current stock price is higher than the average analysts estimate of $98.
The stock trades at a forward price-to-earnings ratio of 74 and a trailing figure of 59. Its price-to-book ratio is 27, while the price-to-sales ratio is 29.
It is common for highly overvalued companies to keep rising after earnings, especially when they publish strong financial results. In Robinood’s case, the most likely catalyst will be its crypto business and its tokenization strategy.
The company recently announced that it would tokenize over 200 stocks for its European business. It is also working on a layer-2 product similar to Base, the one launched by Coinbase in 2023. Base has become a major player in the crypto industry, handling billions worth of transactions a month.
Robinhood stock price analysis
The daily chart shows that the HOOD stock price has been in a strong bull run in the past few months and is now hovering at its highest point on record. It has jumped above the 50-day and 100-day moving averages, while the Relative Strength Index (RSI) has pointed upwards.
Therefore, the path of the least resistance for the stock is bullish after earnings. If this happens, the next point to watch will be at $120, up by 12% above the current level.
However, with the stock priced to perfection, there is a likelihood that it will pull back a bit after it publishes its earnings.
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