At the opening of trading on Thursday, Robinhood (HOOD) shares are falling at a particularly strong pace. This is despite positive news from the retail investor-focused company.
The company’s stock price is expected to improve. The positive news mentioned above relates to the company’s expansion in the United Kingdom. Also noteworthy is an agreement with the regulatory authorities of the state of California in the United States.
Will Robinhood stock recover soon?
Robinhood is a brokerage focused primarily on retail investors. Through its platform, individual investors can access assets from major companies. They also have the opportunity to trade digital currencies such as Bitcoin and other major ones.
All this gives its shares a special status on the stock exchange. However, in recent days, their performance has not been the most positive. According to data from the Yahoo Finance portal, HOOD is trading in the red during the period starting from August 27. At that time, each share of the company was priced at approximately $21.3 dollars.
Currently, the price is $19.11 per share, according to the aforementioned financial portal. As already mentioned, this poor performance of the company on the stock exchange occurs despite the agreement with the California authorities. The latter consists of a $3.9 million fine to Robinhood Crypto for violating the commodities law of that state.
On the other hand, the expansion of the company’s services in different markets outside the United States is highlighted. The particular strength of the brokerage’s expansion in England is highlighted. In this regard, on Wednesday it was learned that British regulators gave the firm the green light to offer its services to users in that country.
Why is HOOD still in the red?
When asked why Robinhood shares are falling on such positive news, the answer is simple. It’s all about the macroeconomic conditions in the United States. Both the labor market numbers and the manufacturing PMI data showed performances well below expectations.
The latter has thus once again raised fears among investors of a possible recession in the US economy. The data confirms that the Federal Reserve is obliged to cut interest rates at its next meeting on 17-18 of this month.
The uncertainty now is not whether the Fed will cut rates, but the magnitude of that cut. Basically, a cut strong enough to stop the labor market from cooling is needed. However, if the cut is too strong, it could trigger other events such as a resurgence of inflation.
As you can see, the macroeconomic conditions within the United States are extremely complex. Investors are not comfortable at all and that explains the recent stock price crashes. It is precisely this scenario that prevents a better performance of Robinhood shares despite the particular good news surrounding the firm.
HOOD shares have been on the decline for the past few days. Source: Yahoo Finance
Is HOOD worth investing in in this context?
All this negative scenario related to renewed fears of recession creates the conditions for the shares to continue to fall. Thus, the inevitable question arises as to whether or not it is worth investing in HOOD shares now. In other words, are the company’s shares at a point where they can be considered a cheap buy?
As you might expect, this is not a question that can be answered easily, especially if the question is asked by those interested in investing with a short-term objective in mind.
However, this uncertainty is less acute if one looks at the development of HOOD’s assets over a longer period. Although the taint of a possible SEC lawsuit persists, the broker remains one of the most popular for retail investors. Thus, in a hypothetical financial rally triggered, for example, by a soft landing, this broker would have a formidable boost.
However, the markets will not remain in the current bearish situation forever. Only in this scenario can we say that Robinhood shares are worth investing in in the long term, even though they are falling in the short term.
Disclaimer: This work is for informational purposes only and should not be taken as investment advice or solicitation.
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