A True Revolution in the Last Decade for Investing. Robinhood has been one axis of change. Free of commissions, Robinhood is by any stretch of the imagination considered a darling amongst new and seasoned investors. But what about investing in Robinhood stock? Is now the time or not to buy it?
This guide explains what Robinhood stock actually is while looking at the company’s growth, and then gives the investor’s perspective on whether or not it might be a good investment for you.
What Is Robinhood Stock?
Robinhood Markets, Inc. is the corporation behind the Robinhood trading app. In July 2021, Robinhood entered the public markets on the NASDAQ, trading as HOOD.
Buying Robinhood stock means you own a portion of the company, not just the usage of their app to invest in other companies. Investors purchase HOOD shares to share in Robinhood’s growth and profits.
The Quick History of Robinhood
Coming into being in 2013, Robinhood set out with one goal in mind: to make investing easy and cheap for everyone. By foregoing trading fees, Robinhood forced other brokers to follow suit.
Its user-friendly app attracted millions of younger investors. The introduction of fractional shares and crypto trading served to increase the level of popularity even more. This fast growth culminated in the 2021 IPO, which gave the public its first chance to buy the stock.
Robinhood Stock Performance
The performance of Robinhood stock (HOOD) has been an extreme roller coaster since its IPO. It first started trading at the price point of $38 per share, but after that has seen wild fluctuations gauged on:
User growth – More users mean more revenue.
Crypto trading volume – A Large portion of Robinhood’s income is crypto.
Regulation – Legal issues and investigations impact confidence.
Market trends – Tech and fintech stocks often swing with market sentiment.
Investors, therefore, need to follow these before acquiring HOOD.
Why Investors Still Watch the Robinhood Stock
Here are a few reasons why HOOD still gets attention:
- Growth Potential
Robinhood continues to develop new products to offer, such as a retirement account and a credit card. Innovation would build growth over the long term.
- Younger Investor Base
The majority of Robinhood’s users are millennials and Gen Z. Consequently, as this cohort starts making more money, the company may grow alongside them.
- Expansion Plans
Robinhood is looking at some international markets. Additionally, expansion abroad would open a new revenue stream.
- Strong Brand
Moreover, being an incredibly well-known fintech brand, Robinhood capitalizes on this brand recognition to stay ahead of a crowded space.
Risks of Robinhood Stock
Every investment has its risks, and Robinhood stock is no different.
- Regulation
Robinhood has ongoing regulatory pressure over payment-for-order-flow issues. Stiffer regulation may hurt profits.
- Crypto Dependence
A large chunk of income is reliant upon cryptos for trading. If crypto slows, Robinhood earnings may also take a hit.
- Competition
Robinhood competes with Webull, Coinbase, SoFi, and traditional brokerage houses. Therefore, it will be tough to stay ahead.
- Volatility
Similarly, like most technology stocks, Robinhood’s price fluctuates in response to current market sentiment.
Is Robinhood Stock a Buy?
So, should you invest in Robinhood stock?
- If one trusts fintech, believes that Robinhood can build, then it would be considered a long-term possibility.
- If one prefers stability, then one will want to wait until Robinhood starts showing consistent profits.
- Analysts have mixed opinions about the stock. Some view it as undervalued, while others refer to it as a risk.
How to Buy Robinhood Stock
Buying Robinhood stock isn’t the toughest thing to do:
Choose a brokerage – You can even choose to use Robinhood itself.
Search the ticker – Type in HOOD.
Decide on the quantity – Buy full or fractional shares.
Set your order – Choose a market or limit order and confirm.
For Canadians, HOOD is available through brokerages providing access to the U. S. markets.
Future Outlook of Robinhood
Robinhood is working on new products, including
- Retirement accounts.
- Credit cards.
- International expansion.
If these initiatives are successful, Hood stock should benefit in the long term.
Final Words
Robinhood has already changed the way people invest. Its stock is still very much a mixed bag of risks versus opportunities.
For growth investors who don’t mind a little volatility, Robinhood stock (HOOD) could indeed present an opportunity worth betting on. However, cautious investors might be better off waiting.
In either case, Robinhood will remain a major player in the fintech space, and its stock will continue to be of interest.
