As the Hargreaves Lansdown share price soars, is it a good buy?

Hargreaves Lansdown (LON: HL) share price has made a spectacular comeback in the past few weeks. The stock jumped to a high of $944.8p on Friday, the highest level since February 14th. In all, the shares have jumped by more than 20% from the lowest point in June, signaling it has moved into a bull market.

Business is slowing

Hargreaves Lansdown, a leading British financial services company, did well in a difficult period. Results published this week revealed that the company’s net new business jumped by 6% in the second quarter to £1.7 billion. Its closing assets under administration jumped by 2% to over £134 billion while the net new clients rose by 13,000 to 1.8 million.

An important part of its disclosures is that the company’s trading volume drifted downwards towards the end of the quarter. The management attributed this increase to the ongoing cost of living crisis, higher interest rates, and market volatility. 

I believe that the underperformance of UK stocks had a role in this as well. The FTSE 100 index has barely moved this year even as its peers like the German DAX and French CAC 40 indices have surged close to their all-time highs.

Meanwhile, Hargreaves Lansdown shares rose after the company’s chair decided to step down after criticism by Peter Hargreaves. The chairman and its biggest shareholder has previously complained about the rising costs and falling shares. Precisely, he criticised the management for spending more money on internal IT instead for automated advice.

Hargreaves Lansdown has plunged by more than 65% from 2019. This decline is mostly because of rising competition and falling volumes. Unlike in the United States, UK’s retail investing and trading landscape is much smaller. Instead, pensions and other investment funds play an outsize role in the market.

Hargreaves Lansdown share price forecast

HL chart by TradingView

The HL stock price has been in a strong bullish trend in the past few weeks. As it rose, the stock moved above the important resistance level at 872.2p, the highest point on June 12th. It also crossed 822p (July 3 high). The recent rally has also seen the price move above the 25-day and 50-day moving averages.

The Relative Strength Index (RSI) has jumped above the overbought level. Therefore, I suspect that the shares will retreat and retest the support at 872p.