Robinhood Stock Falls as Earnings Disappoint and Growth Stalls (2024)

FAQs

Why has Robinhood stock dropped? ›

The stock is down more than 60% from its initial public offering price in 2021 as customer activity has declined from the frenzied stock-trading during the pandemic. Robinhood posted 3 cents of earnings on $486 million in revenue, versus expectations for a 1-cent loss on $473 million in revenue.

Since Robinhood is a member of SIPC, you are covered for up to $500,000 worth of securities, including $250,000 which can cover cash. So, if Robinhood somehow went out of business and lost customer assets, the SIPC would step in. Your assets would be safe regardless of what happens to the brokerage.

1 It's considered a safe option for investors' securities and cash for various reasons: Robinhood is a member of the Securities Investor Protection Corp. (SIPC).

One caveat here: if you are buying stocks on margin, you can lose more than your initial investment. On the contrary, you must pay cash for long options, and cannot buy them using margin. When you sell something “short,” the most you can make is what you sold it for.

Robinhood played a crucial role in the retail-trading frenzy during the pandemic but has struggled with a contracting customer base spooked by higher cost of commodities.

Summary. Shares of Robinhood, down 35% over the past year, are poised to rally as the market recovers. A broad recovery in crypto, as well as rising interest in options, will help Robinhood's transactional revenues get back on track. In addition, higher interest rates are helping Robinhood's spread.

By limiting losses to 7% to 8% or even less, you can avoid getting caught up in big market declines. Some investors may feel they haven't lost money unless they sell their shares. They hold on with the hope it goes back up so they can break even. But it's still a loss if the current price is below your purchase price.

Though delisting does not affect your ownership, shares may not hold any value post-delisting. Thus, if any of the stocks that you own get delisted, it is better to sell your shares. You can either exit the market or sell it to the company when it announces buyback.

Generally, if the short leg assignment is processed in the account, the deficit will be covered. An account deficit due to early assignment might result in a margin call. In these cases, Robinhood is likely to take action to cover your position for you.

Robinhood provides a bare-bones trading experience, making it a poor choice for investors seeking the best trading platform. Also, Robinhood's stock research tools are lacking when compared to $0 commission brokers such as E*TRADE, Charles Schwab, and Fidelity.

Is Fidelity better than Robinhood? ›

Fidelity's platforms also support trading from charts or placing basket trades, which are features not available with Robinhood. Both Fidelity and Robinhood have suitable trading experiences for new investors, but Fidelity is superior to Robinhood for intermediate and advanced investors.

Do you actually own the stock on Robinhood? Investors do own the shares of stocks and ETFs purchased on the Robinhood platform. This is the same type of stock ownership you get when you purchase stocks through most other brokerage companies.

If a stock goes negative, do you owe money? If you do not use borrowed money, you will never owe money with your stock investments. Stocks can only drop to $0.00 per share, meaning you can lose 100% of your investment but not more than that, seeing as the stock cannot be of negative value.

The value of the stock itself can't go negative. It can only become zero is the company goes bankrupt. The only case when you can see negative result is if you bought the stock and the price declined. For example, you bought Walmart stock at $157 and it fell to $150.

Your securities and cash are protected by SIPC

Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities for customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org.

Robinhood is a good platform for active trading and provides commission-free trades on all investments. But it's lacking in some areas, such as the number of accounts it offers and the fact it doesn't let you invest in certain popular asset classes such as bonds and mutual funds.

Stock Price Forecast

The 13 analysts offering 12-month price forecasts for Robinhood Markets Inc have a median target of 12.00, with a high estimate of 25.00 and a low estimate of 9.00. The median estimate represents a +6.38% increase from the last price of 11.28.