Robinhood Markets Inc. (NASDAQ:HOOD) reported third-quarter earnings on November 2 amid mixed expectations. A Fed rate decision on Wednesday was keenly watched as growth stocks have been worst hit in the tightening circle.
As Invezz reported, the US central bank raised rates by 75 basis points. The increase was largely expected, but the tone of the bank officials was less reassuring to stock markets. The Fed hinted at further moderate rate hikes, underlining more pain for investors eyeing battered stocks like Robinhood.
Robinhood stock reacted positively to the quarterly financial report amid the macro jitters. The stock rose by 5.96% on Thursday. The gains came after the brokerage firm reported a quarterly loss of $175 million or £155.75 million. The loss was lower than the projected $311 million or £276.79 million. Robinhood benefited from rising interest, posting a net interest revenue increase of 73% to $128 million or £113.92 million.
Conversely, a persistent crypto winter dealt a blow to Robinhood. The crypto transaction volume went south by 12% to $51 million or £49.39 million. Falling crypto volumes pushed overall revenues down 1% to $361 million or £321.29 million. The monthly active users came at 12.2 million, below the 13.74 million estimates.
Nonetheless, the gains after the quarter results reveal glimpses of the potential for Robinhood. For a stock that has lost more than the S&P 500 this year, investors could salivate at the low valuation. However, whether we are in the right moment to snap HOOD is highly doubtful. Continuing economic tightening and recession fears are major developments investors may take seriously for growth names.
Aside from the macro outlook, HOOD is showing renewed enthusiasm. The stock has nearly doubled in value since the June lows. The stock has maintained a system of higher highs and higher lows on a clear uptrend. The stock closed above a key level at $11, a new support zone.
It may be hard to tell how Robinhood reacts to the uncertain macro-outlook going forward. However, on the technical outlook, this article finds that a higher price is possible after a break above $11. Investors can buy the stock above $11 but should remain cautious amid the ongoing macro developments.
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