Robinhood becomes the latest meme stock with a 74% spike: is it still a buy?

Robinhood Markets Inc. (NASDAQ:HOOD) shares extended this week’s gains to over 90% after gaining more than 42% on Wednesday. The stock price is up more than 80% from its IPO price of $38.00 per share. Analysts think HOOD could now be a meme stock after its post-IPO gains.

The stock spiked sharply in early trading hours prompting Nasdaq to halt trading between 9:35 AM and 9:40 AM ET.

Investors are upbeat about Robinhood stock, with the likes of Cathy Wood’s ARK Innovation ETF adding to their stake. On the other hand, CNBC’s Mad Money host Jim Cramer recently suggested that the company consider buying “Buy Now, Pay Later” company Affirm Holdings Inc. (NASDAQ:AFRM).

So, should you buy HOOD shares in August 2021?

Robinhood’s 12-month revenue swing does not justify its post-IPO spike of more than 80%. That is why some analysts view it as a meme stock. However, its growth potential is enormous, given its strategic positioning in the financial services market.

Robinhood has disrupted the stock brokerage market with low trading commissions on stocks. In addition, the company’s popularity has grown over the years primarily for creating conducive conditions for small-cap stock trading.

Therefore, investors who target disruptive growth stocks could buy HOOD shares based on the exciting growth potential.

Technical overview: Robinhood Markets stock price predictions for Q3 2021

Technically, Robinhood shares appear to have spiked to trade above $85.00 per share before pulling back to settle at $66.00. However, after bouncing back several times on Wednesday, the stock price also seems to enjoy solid support around the $57.88 level.

Therefore, investors will target extended rebounds at approximately $78.04 and $85.11. The stock is yet to hit overbought conditions in the 15 min chart, leaving room for continued upward movement.

Bottom line: why buy Robinhood Markets stock now?

Although Robinhood shares seem steeply-priced at a price-sales ratio of 28.90, the company offers exciting growth prospects after disrupting the stock brokerage market. Therefore, growth investors would be looking to pounce before shares extend gains.