Yesterday’s massacre came on the back of Wednesday’s 50% rally, which still leaves HOOD 34% higher than its $38.00 listing price.
Thursday’s sharp reversal followed the news that early investors are eligible to sell stock. Although 98,0000,000 shares are free to be sold, there is no indication yet that pre-IPO investors are liquidating.
However, the threat of alone was enough for the Robinhood stock price to succumb to heavy selling.
Clearly, an almost 10m increase in the float would be a potential negative factor but ultimately may create a more stable trading environment should it happen.
Some weakness yesterday could be because Wolfe Research started coverage of Robinhood with a hold rating and a $45.000 price target, around 45% below Wednesday’s $85.00 high.
HOOD Technical analysis
As the stock has only been trading for six days, I have used a 15-minute chart to highlight the price action.
Looking at the chart, the price is clearly breaking down and should fill the gap from Tuesday’s close at $46.70.
However, the Relative Strength Index reading of 22.82 is showing the price is extremely oversold. Although how relevant this is, it is debatable considering the volatile trading conditions.
Presently, it would not be prudent to give a Robinhood stock price prediction. On that basis, my suggestion to anyone that doesn’t have a position would be to sit tight and wait for a drop in volatility.
The next week may continue to produce wild swings in the price, but the price will find stability in due course. Although, at what level remains to be seen for now.
Robinhood stock price chart (15m)
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