Robinhood stock dives as crypto woes continue, costs rise: buy the dip?

Robinhood stock price slumped by over 9% in the extended hours after the blue-chip company’s earnings fell short of expectations because of the cryptocurrency slump.

HOOD dropped to $74 after closing at $82 in the regular session. So, is it safe to buy the dip or sell the rip?

Robinhood stock falls as earnings fall short

HOOD stock retreated after the company published its first-quarter earnings, which fell short of expectations because of the ongoing crypto winter.

Its revenue rose to $1.067 billion, up by $140 million from the same period a year earlier.

Its net income rose slightly to $346 million.

Robinhood’s performance came as the company made some major announcements during the quarter.

For example, it launched Robinhood Family Hub, which allows families to manage their finances in an easy way. 

Robinhood also launched an early dividend payment solution, where it allows its customers to receive dividend payouts before the company distributes them. 

It launched the beta version of Robinhood Socials, Platinum card, and the initial public of the Robinhood Ventures Fund. 

These initiatives, together with its core business, helped to boost the number of funded customers by 1.7 million to 27.4 million, while the total assets on assets rose to over $307 billion.

The main challenge was that Bitcoin and most altcoins remained in the red during the quarter, with the notional volume falling to $65.7 billion from $82.4 billion in the fourth quarter.

Crypto volume on the Robinhood app was $23.8 billion, much lower than the $46.1 billion in the same period last year.

Cryptocurrency prices have done relatively well in the past few weeks, with Bitcoin rising to a high of $79,000 and the market capitalization of tokens hitting $2.5 trillion.

This rally has led to more volume in crypto exchanges. However, there is a risk that the rally has peaked as Bitcoin has failed to move above $80k.

HOOD stock price also retreated after the company boosted its planned expenses.

It boosted the operating expenses to between $2.7 billion and $2.86 billion from the previous range of $2.6 billion and $2.725 billion. 

This increase is because the company plans to invest money in the Trump accounts.

The company expects the business to make a small margin over time.

Still, despite these challenges, Robinhood is a solid business with a good market share in the trading industry. It has also become fairly cheap in the past few months.

While the crypto weakness will continue, it will be offset by the other businesses.

HOOD stock price forecast: technical analysis 

Robinhood stock chart | Source: TradingView

The daily timeframe chart shows that the HOOD stock pulled back after its earnings, moving from the closing price of $82 to $74. This price is slightly below the 61.8% Fibonacci retracement level.

The stock has remained below the 100-day Exponential Moving Average (EMA) and the Ichimoku cloud indicator.

Also, the Relative Strength Index (RSI) has dropped from the overbought level of 70 to below 50.

Therefore, the stock will likely remain under pressure today and then resume the uptrend later this month.

Chances are that it will eventually rebound to the 23.6% Fibonacci retracement level at $125. On the flip side, a drop below the key support at $68 will invalidate the bullish outlook.