Robinhood Stock Looks Cheap At $16

Robinhood Stock Looks Cheap At $16

Robinhood Markets stock (NASDAQ: HOOD) has declined by almost 31% over the last month, considerably underperforming the S&P 500 which remains up by about 2. 4% over the same period. There are a lot of factors weighing Robinhood stock down. Firstly, it's looking increasingly obvious that the boom in so-called "meme" stocks and speculative cryptocurrencies such as Dogecoin is cooling off. This was visible in Robinhood's Q3 earnings as it actually lost customers after posting record growth in the first half of the year. Moreover, the Federal Reserve is likely to raise interest rates sooner than expected to fight inflation, and this could prove to be a net negative for the stock markets and trading activity. Separately, the SEC has also been investigating Robinhood's payment for order flow revenue model, which entails selling the order flow of its customers to market makers, and this has created a big overhang over the stock as transaction revenues accounted for about 78% of Robinhood's revenue in Q3. So is Robinhood stock a buy following the recent sell-off? We think it is. While the concerns regarding the company's near-term outlook are legitimate, we think this is more than priced into the stock, considering that