HOOD Stock Prediction: Will Robinhood Go Up If It Adds More Cryptos?

Mohit Oberoi, CFA - Author
By

Nov. 30 2021, Published 10:49 a.m. ET

Robinhood (HOOD) stock fell to a new all-time low of $25.75 on Nov. 29. While the stock recovered from the lows and closed at $27.07, it's still way below the IPO price of $38 and trades at a massive discount to its all-time high of $85. What’s the prediction for HOOD stock and will it go back up if it adds more cryptos like Shiba Inu to the platform?

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Robinhood has had a volatile ride as a publicly-traded company. The stock fell below the IPO price on the listing day. However, it saw buying interest soon from retail traders as well as fund managers like Cathie Wood. HOOD became a sort of meme stock as retail investors, many of whom trade on the Robinhood platform only, went on a buying spree.

HOOD stock has been falling amid slowing growth.

HOOD stock has been falling amid slowing growth. The company’s revenues and active customer base fell in the third quarter. The guidance for the fourth quarter didn't instill confidence either.

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Robinhood saw a spike in trading volumes in the first half amid the meme mania. While in the first quarter, it was the meme stock mania, in the second quarter, Dogecoin worked wonders for Robinhood. Revenues from DOGE trading accounted for a large chunk of Robinhood’s second-quarter earnings. In the second quarter, Robinhood got more revenues from cryptos than stocks.

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However, the meme stock mania has subsided. DOGE has fallen out with traders who have pivoted to other meme cryptos. HOOD only has seven cryptos on the platform. The lack of more cryptos held back Robinhood's volumes in the third quarter.

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HOOD's stock price prediction looks positive.

The prediction for HOOD stock looks positive. Its consensus target price of $45 implies an upside of 66 percent over the current prices. Analysts have a split forecast though and Robinhood stock has six buys, six holds, and one sell rating.

Adding more cryptos could help Robinhood stock recover.

During the third-quarter earnings release, Robinhood indicated that it will add more cryptos to the platform even though it plans to be conservative. Robinhood is also coming up with crypto wallets and is testing Dogecoin initially.

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Robinhood might also consider activities like crypto lending and staking on the platform but it's waiting for more regulatory clarity. The company has been quite conservative with adding new cryptos. So far, it hasn't added Shiba Inu to the platform despite a spirited online campaign from SHIB fans.

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The lack of more cryptocurrencies on the platform is hurting Robinhood’s growth. Since the meme stock mania, and by its extension the stock trading spike that HOOD witnessed, has withered away, the company will need more avenues to spur growth. Robinhood might add more serious financial products like IRA to the platform. However, it remains to be seen if Robinhood can shed the image as a “fun trading App.”

Adding more cryptos to the platform would help Robinhood stock in the short term.

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Cathie Wood added more HOOD stock.

Cathie Wood has added more HOOD stock. On Nov. 29, HOOD was the top buy for the flagship ARK Innovation ETF (ARKK) and the second-largest purchase for ARK Fintech Innovation ETF (ARKF)

After the steep fall, HOOD stock should recover and go back up. The company’s long-term forecast looks positive even though it's witnessing a short-term slowdown.

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