What is Robinhood
Robinhood Markets, Inc. is an American financial services firm based in Menlo Park, California, that is most known for pioneering commission-free stock, ETF, and cryptocurrency trading with a mobile app launched in March 2015. Robinhood is a FINRA-regulated broker-dealer that is also a member of the Securities Investor Protection Corporation. It is also registered with the US Securities and Exchange Commission.
Interest gained on customers' cash balances, selling order information to high-frequency traders (a practice for which the SEC started an investigation into the company in September 2020), and margin lending is the three main sources of revenue for the company. Robinhood has 31 million users and 1.6 million people on its cryptocurrency wallet waitlist as of 2021.
The original offering of Robinhood was commission-free stock and exchange-traded fund trading. Robinhood launched instant deposits in February 2016, crediting users instantly for deposits up to $1,000; previously, monies appeared three days later via ACH transfer. The startup began offering free stocks in exchange for referring new members in August 2017. Options trading was introduced in December 2017. Retirement accounts, mutual funds, and bonds are among the services that are not available.
Robinhood usually only allows you to trade stocks and ETFs that are listed on the Nasdaq and the New York Stock Exchange, and not over-the-counter securities like those traded on OTC Markets. Robinhood added support for American depositary receipts (ADRs) in August 2018, along with 250 highly sought overseas stocks. In August 2018, Robinhood banned its consumers from buying certain high-risk penny stocks, including Helios and Matheson Analytics, the parent company of MoviePass.
Several major brokerages, including E-Trade, TD Ameritrade, and Charles Schwab, announced trading charge elimination in short succession in October 2019. One reason given was competition with Robinhood.
Robinhood is a publicly traded company, making its stock available to anyone of legal age interested in purchasing shares.
Why Buy Robinhood Shares (HOOD)
Robinhood shares will rise and fall in value according to how well the company is performing at a given moment in time. Better-than-expected earnings will make Robinhood share prices rise, while weaker earnings will make share prices fall. However, there are many reasons why a company's share price can change.
People trade Robinhood shares because, just like other financial instruments, they can be an opportunity to invest money. At a basic level, you can take a position on Robinhood shares to get exposure to economic growth. If an economy is in good shape, you might find that companies operating in that specific economic branch or industry will grow too.
Company growth is correlated with share price increases, which is what people are hoping for when they buy Robinhood shares.
On July 28, Robinhood priced 55 million shares at $38 a share, raising $2.1 billion. But the pricing came in at the low end of its expected range. The stock closed the day at 34.82, more than 8% below the IPO price.
The company is known for pioneering commission-free stock trading with no account minimums. The platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options, and cryptocurrencies. Robinhood ranked among the best online stock brokers in 2021 for Mobile Trading Platforms/Apps and Margin Investing/Interest Rate.
The app is popular among young and first-time investors and traders. Millions of young investors flocked to Robinhood during the meme-stocks trading mania for stocks like GameStop (GME) and AMC Entertainment (AMC). The excitement around cryptocurrencies like Bitcoin also fueled interest in the app.
Robinhood stock is traded on the New York stock exchange under the HOOD ticker.
If all that makes you want in on Robinhood’s fintech growth, here is everything you need to know to buy Robinhood stock & shares to invest in HOOD.
How to Buy Robinhood Shares
Learning how to buy shares may not sound complicated, but you will need to do some research — and learn the basics — before making your first investment.
- Learn the difference between investing and trading
- Review Robinhood’s performance and outlook 2022
- Understand the risks and charges
- Access the trading platform and place your orders
- Stay up to date with the latest news and rumors about Robinhood
1. Learn the difference between investing and trading
People have two options to buy shares of stock online. Firstly, they can buy shares in companies on the exchanges where they are listed. For instance, you can buy Robinhood stock on the NASDAQ exchange, so you own a share in the company (investor). Alternatively, they can buy Robinhood shares without owning them, speculating on the price of the underlying asset (trader).
Investing and trading are similar terms that some people will sometimes use interchangeably – but there are significant differences for you to be aware of.
Investing in Robinhood Stock
Investors buy Robinhood shares hoping their price will rise and they can sell them later for a profit, adhering to the basic principle of buying low and selling high. Investors will take positions over a longer period, attempting to profit from share price changes as well as dividend payments.
While this means that they might need more initial capital to get started when compared to trading, their losses would be capped at this initial price tag. That said, investors should be aware they might get back fewer returns than they initially invested.
Investors will buy Robinhood shares to:
- Make a profit from the Robinhood share price rising
- Receive an income from dividends if the company pays them
- Benefit from the effects of compounding
This last point requires investors to hold onto their shares for an extended period. That’s why you’ll sometimes hear the phrase ”time in the markets is better than timing the markets” when talking about share investments.
>> Learn how to invest in stocks
Robinhood (or any single stock, for that matter) can be a very volatile investment. You can lower the risk by diversifying your investment holdings.
An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund provides a broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.
HOOD currently is not included in a major stock index.
Emerging markets exchange-traded funds (ETFs) provide exposure to the performance of companies within the global eCommerce industry.
HOOD makes up 6.20% of BIDS (Amplify Digital and Online Trading ETF), 4.07% of VBB (Valkyrie Balance Sheet Opportunities ETF), 3.83% of MEME (Roundhill Meme ETF), 3.74% of NFTZ (Defiance Digital Revolution ETF ), 3.12% of ARKF (ARK Fintech Innovation ETF).
>> Learn what ETFs are and how do they work
Trading Robinhood CFDs
On the other hand, traders might seek to capitalize on short-term share price gains. Rather than investing in the shares, traders speculate on the shares’ value. They can speculate on it rising by going long, as well as falling by going short.
Trading Robinhood stock means that you are speculating on a share’s price movements with derivatives like CFDs. In other words, you are purchasing Robinhood shares without taking direct ownership.
Leverage is available when you use this product, giving you full market exposure for an initial deposit – known as margin – to open your position.
For example, a trader who wanted to buy 1,000 Robinhood shares CFD at $15.00 per share would only require $3,000 of trading capital, thereby leaving the remaining $12,000 available for additional trades.
But keep in mind that leverage can increase both your profits and your losses as they will be based on the full exposure of the trade, not just the margin requirement needed to open it. This means losses, as well as profits, could far exceed your margin.
With CFDs, you can ‘buy’ (go long) the shares if you think the Robinhood stock’s price will rise, or you can ‘sell’ (go short) if you think the Robinhood stock’s price will fall.
>> Learn what is CFD trading and how it works
Going Long Robinhood CFD
Robinhood has a sell price of $14.00 and a buy price of $14.20.
Robinhood’s next earnings announcement is fast approaching, and you expect it to be good news.
You think the company’s share price will go up, so you buy 2,000 Robinhood CFDs at $14.20 This is the equivalent of buying 2,000 Robinhood shares.
Because in CFD trading you can use leverage, you do not need to put up the full value of Robinhood shares. Instead, you only need to cover the margin, which is calculated by multiplying your exposure with the margin factor for the market you are trading.
So, if Robinhood has a margin factor of 20%, your margin would be 20% of the total exposure of your trade (2,000 share CFDs x $14.20 = $28,040), which is $5,608.
If your prediction is correct:
When Robinhood announces its results, it is clear the company had a successful quarter and as you had predicted, its share price climbs.
You decide to close your position when it reaches $15.22, with a buy price of $15.24 and a selling price of $15.22
You reverse your trade to close a position, so you sell your 2,000 CFDs for $15.22
To calculate your profit, you multiply the difference between the closing price and the opening price of your position by its size. $15.22– $14.02 = $1.20, which you multiply by 2,000 CFDs to get a profit of $2,400.
If your prediction is wrong:
Robinhood’s results are worse than expected, and its share price immediately falls. You decide to cut your losses and sell your 2,000 CFDs at $13.60.
Your position has moved $0.42 against you, meaning you suffer a loss of $840.
Going Short Robinhood CFD
Shorting with derivatives can be an effective way to protect your investments against downward price movements in your non-leveraged investment portfolio. Also, it can be a way to generate profits outright from shares that are falling in value. But when you go short, your potential losses are theoretically uncapped because there is no limit on how high a company’s share price can rise.
Here is an example:
Suppose Robinhood shares are currently trading with a selling price of $14.00, and you think the price will go down. So, you decide to open a short CFD position on 1,000 Robinhood shares CFD. A week later, the buy price reaches $12.40, and you close your position. This means you made $1,800 in profit ([14.20 - 12.40] x 1,000 = $1,800), excluding additional costs.
If the price rises, you register a loss. For example, if Robinhood shares rose to a price of $14.53, you would suffer a $530 loss instead, excluding additional costs.
When you create a trading account with CAPEX, you will be able to:
- ‘Buy’ (go long) or ‘sell’ (go short) Robinhood and other 2,000 international shares to speculate on their price rising or falling
- Take a position on our range of ETFs to get exposure to a basket of shares from an entire country, index, or sector that could be rising or falling in price.
- Trade a host of global indices to go long or short on the performance of an entire economy with a single trade.
- Use QuantX, the smart portfolio builder that helps you cover the popular industries and only invest in the top-performing stocks.
2. Review Robinhood’s Performance and Outlook 2022
Before buying Robinhood stock—or any stock (see our guide on how to buy shares)—it’s wise to do some research into the company’s financials, performance, and outlook. The easiest place to get started is through a company’s annual reports and quarterly reports. Public companies like HOOD are required to publicize detailed information about their financial health in these.
You can find these on Robinhood’s investor relations site or by searching the Securities and Exchange Commission’s (SEC) database.
You may also turn to experts for their input. Brokerage companies frequently release commentary on major stocks and industries, and third-party evaluators like Trading Central provide comprehensive technical and fundamental analysis.
When you combine financial data with expert insight, you will be able to decide how much of your money you want to put into Robinhood stock.
Robinhood Shares Forecast - Fundamental Outlook 2022
Before you load up the trunk with Robinhood shares, pop opens the hood and see what you are really getting into. Remember, when you buy Robinhood stock, you are purchasing a small portion of an actual business:
Robinhood Markets, Inc., based in Menlo Park, California, is best known for pioneering commission-free stock, ETF, and cryptocurrency trading via a mobile app launched in March 2015.
Robinhood's balance sheet, income statement, competition, and management (all explained in our guide on how to research stocks) will help you give the company a good once-over.
You can access research, analyst ratings, and other key information about Robinhood via your brokerage account or a financial information website. If you like what you see, your next step is to consider whether Robinhood fits into your current investment portfolio.
Robinhood's market capitalization is 13.354B
- Robinhood has a 0.04 percent Return On Assets. This is lower than the industry average of 5.99%. Robinhood outperforms 86% of its rivals in the industry.
- Robinhood has a 0.10 percent Return On Equity. This is lower than the industry average of 19.08%. HOOD outperforms every other company in the industry.
- Robinhood's profit margin of 0.78 percent is lower than the industry average. The average profit margin in the industry is 28.19 percent. Profit Margin is higher in 88 percent of industry peers.
- HOOD is fairly valued, with a price-to-book ratio of 1.38.
- When HOOD's price-book ratio is compared to the average industry price-book ratio of 1.53, it is found to be in line with its rivals.
- With a Price/Earnings Ratio of 1598.00, HOOD is now considered to be excessively pricey.
- HOOD is worth more than the industry average of 11.89, with a Price/Earnings Ratio of 1598.00. 100% of the companies in the same industry are cheaper than HOOD!
- The Forward Price/Earnings Ratio is predicted to be negative next year because of HOOD's expected negative earnings.
- The high PEG Ratio, which accounts for growth in the Price/Earnings ratio, suggests that the company is overvalued.
- Over the last year, the Earnings Per Share has increased by a whopping 106.99 percent.
- When compared to the previous year, HOOD has seen a significant increase in revenue. Revenue has increased by 245.48 percent.
- The revenue of HOOD is likely to increase significantly. Revenue will increase by 39.42 percent every year during the next five years.
- Earnings Per Share growth is predicted to be significantly negative for HOOD. The EPS will drop by -151.90 percent per year during the next five years.
- HOOD is outperforming the industry averages with a Debt to Equity ratio of 0.00. The industry standard is 0.55.
- With a current ratio of 1.60, HOOD should be able to meet its short-term obligations without difficulty.
- The Quick Ratio of HOOD is 1.60. This is a typical value, indicating that HOOD is financially sound and should be able to satisfy its short-term obligations without difficulty.
- When compared to the industry average Current Ratio of 2.06, HOOD is in a weaker position to meet its short-term obligations than its rivals.
- When compared to the industry's average Quick Ratio of 2.04, HOOD is in a poorer position to meet its short-term obligations than its rivals.
*Last update: December 2021. Source: Yahoo Finance
Robinhood has never declared or paid a cash dividend and does not intend to pay.
Robinhood Shares Forecast - Technical Outlook 2022
Technical traders analyze price charts to attempt to predict price movement. The two primary variables for technical analysis are the time frames considered and the technical indicators that a trader chooses to utilize.
Our web-trading platform, for example, offers 6 chart types (including the famous Japanese candlestick chart) to help you analyze price performance across different timeframes. It also enables you to deal in an instant – directly from the charts. You will be able to open, close and edit positions in just a couple of clicks.
Trading charts always feature distinct patterns that technical analysts can use to interpret the behavior of buyers and sellers. These chart patterns can give traders an indication of where the market could go next. As you will notice when you look at a chart, the market will usually move in one overall direction or trend. There are three types of market trends: uptrends, downtrends, and sideways trends.
Robinhood stock has been in a downtrend since the IPO. HOOD stock is over 80% off the all-time high set on Aug. 4 at 85.00. Keep an eye out for a new base to form, which would offer the stock's first buy point.
The price chart shows a clear downside channel with the price testing the lower band of the channel. The technical indicators signals a bearish divergence and HOOD stocks can consolidate between $10 and $15 before trending to the upside again.
To buy Robinhood shares or not?
It is recommended to watch for stocks in the major long-term support area. We should buy Robinhood shares at relatively cheap prices (compared to historical values), not expensive prices. Also, have an exit plan for how you will exit a profitable trade. Define how and why you will exit. Since we used to support to get into the trade, you may consider exiting just below a long-term resistance level.
If buying at support, and planning to exit just below resistance, the upside potential should outweigh the downside risk by at least 2:1 or even 3:1. That means that if you buy Robinhood shares at $15, you should be reasonably able to get out of the stock at $12 or higher. In an absolute worst case you lose $3 a share, but based on the historical chart it is quite feasible to go up to $6/share or more. This is known as the risk/reward ratio, a key indicator when deciding to buy Robinhood shares or not.
With CAPEX WebTrader, you can perform an in-depth analysis of the charts with 90 indicators (including moving average, MACD, RSI, and Bollinger Bands). The platform also supports an interactive trading activity with high-end research tools helping you interpret market data.
Analyst consensus - HOLD
The current consensus among 15 polled investment analysts is to hold stock in Robinhood Markets Inc. This rating has held steady since December when it was unchanged from a hold rating.
- Buy (6)
- Hold (7)
- Sell (2)
The price target on Robinhood in 2022
The 13 analysts offering 12-month price forecasts for Robinhood Markets Inc have a median target of 37.00, with a high estimate of 58.00 and a low estimate of 17.00. The median estimate represents a +131.83% increase from the last price of 15.96, which makes Robinhood one of the best stocks to buy in 2022.
3. Understand the risks and charges
Trading can be seen as riskier than investing due to leverage. But investing also carries a risk – and there is no guarantee that your investments would increase in value, so you could receive back less than you initially invested.
Before deciding to trade in shares, you should take steps to manage your risk. We have courses at CAPEX Academy that take you through risk management and how to mitigate your exposure to risk in the financial markets.
Our costs and charges for trading vary depending on the product that you use to take a position.
Robinhood (HOOD) CFD Trading Conditions
|SPREAD PER UNIT
|OVERNIGHT ROLLOVER - LONG
|OVERNIGHT ROLLOVER - SHORT
- Spread represents the difference between ASK price and BID price.
- Future Rollover adjustment consists of the difference in price between expiring contract and new contract as well as the spread of the CFD.
- Swap is the amount credited to or debited from an account where positions are held overnight.
- Inactivity fee represents the monthly amount deducted if no activity is recorded for 12 months in an account.
4. Access the trading platform and place your orders
To buy Robinhood shares CFD with CAPEX Webtrader is very easy and intuitive. Opening an online trading account is as easy as setting up a bank account. Here are the steps:
Open an account or log in
First, create an account or log in on capex.com. To open an account, click the "Register" button and complete your details.
Once the platform is accessed, the registration process must be completed in order to operate with real money. Click "Complete the Registration and Start Trading".
To log in, from the CAPEX website, click on "Login".
Deposit funds into your account
To trade with a live account, it is necessary to deposit funds. This is done from the platform itself by clicking on the "Add funds" button:
Also, it is possible to trade on a risk-free demo account with a balance of € 50,000, which is ideal for getting to know the platform and testing trading strategies.
CAPEX offers you different payment methods: debit cards, credit cards, bank transfer, skrill, and more.
It is noteworthy that CAPEX does not charge any fees or commissions for depositing funds.
Look for Robinhood shares
To view Robinhood shares (HOOD) real-time price and chart on the trading platform can click on the "Search" icon located in the left panel or by clicking on "Shares" and then select the instrument, in this case, Robinhood.
Use the indicators and drawings to analyze the chart
Click the indicators icon and select your favorite ones. There are trend-following, oscillators, volatility, and support/resistance indicators available. To learn how many indicators to use and how to combine then visit the Technical Indicators section in CAPEX Academy.
Set up the order to buy Robinhood shares
To buy Robinhood shares CFD, click on the "Buy" button and a window is displayed to configure the purchase order:
The number of Robinhood shares to be purchased must be entered and it is allowed to set up a Stop Loss to limit the potential loss, and/or a Take Profit to close a profitable position once the Robinhood stock reaches a specific price. These orders can be configured based on price, pips, cash value, or percentage.
To proceed with the purchase, click on "Place Order".
However, HOOD trading does not end here. You will want to check out the next step to make sure you are investing your money as well as you can.
Why Trade Robinhood with CAPEX?
- Advanced AI technology at its core: Whether they prefer the web-based and mobile-ready WebTrader or favor the highly popular MetaTrader 5, we make sure investors make effective use of fast and reliable trade execution speeds, complex order and risk management tools, advanced charting options, powerful research tools in collaboration with highly-regarded platforms such as Trading Central or TipRanks.
- Trading on margin: Providing trading on margin (up to 5:1 for individual equities), CAPEX gives you access to the stock market with the help of CFDs.
- Trading the difference: When trading Robinhood CFD, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the Robinhood stock price. Online trading with CFDs is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop loss, take profit, and apply trading scenarios aligned with their objectives.
- All-round trading analysis: The browser-based platform allows traders to shape their market analysis and forecasts with sleek technical indicators. CAPEX provides live market updates and various chart formats, available on desktop, iOS, and Android.
- Focus on safety: capex.com is operated by Key Way Investments Ltd and is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) (license no. 292/16).
- Global partnerships: CAPEX is proud to be the Proud Sponsor of Juventus, one of the most prestigious football clubs in the world, a football club that has a special place in the hearts of the people of Italy, with a strong legacy and a dedicated community.
5. Stay up to date with the latest news and rumors about Robinhood (HOOD)
Get the latest Robinhood Inc. (HOOD) stock news and headlines to help you in your trading and investing decisions.
History of Robinhood
Vladimir Tenev and Baiju Bhatt, who had previously constructed high-frequency trading platforms for financial institutions in New York City, founded Robinhood in April 2013. The company's name stems from its objective to "give everyone, not just the wealthy, access to the financial markets." Brokerages charge "fractions of a penny" to execute a trade, according to Tenev, although they normally charge $5 to $10 each trade and require account minimums of $500 to $5,000.
The company debuted its software in front of the public for the first time at LA Hacks, then released it on the AppStore in December 2014 and formally launched it in March 2015.
In January 2015, 80% of the company's consumers belonged to the "Millennial" generation, with an average age of 26. Users who have made a trade use the app on a daily basis, and 90% use it on a weekly basis. Robinhood has 31 million users as of 2021.
Robinhood raised $110 million in April 2017 at a valuation of $1.3 billion, led by Yuri Milner of DST Global, Greenoaks Capital, and Thrive Capital.
On September 6, 2018, at Moscone Center in San Francisco, California, Robinhood co-founder Baiju Bhatt (left) and moderator Josh Constine (right) speak onstage during Day 2 of TechCrunch Disrupt SF 2018.
DST Global led a $363 million Series D fundraising round for Robinhood on May 10, 2018.  Robinhood had raised $539 million in venture capital funding as of May 2018, with a current valuation of $5.6 billion, up from a previous valuation of $1.3 billion.
The company announced in February 2018 that it would relocate its headquarters from Palo Alto to the former Sunset magazine headquarters in Menlo Park.
Bloomberg and other news sites reported in May 2019 that Robinhood was seeking an additional $200 million in capital, valuing the firm at $7 billion to $10 billion. Robinhood announced its expansion to the United Kingdom in November 2019.
Robinhood trading rose during the 2020 stock market crisis. The market's following surge was credited in part to Robinhood traders, although a study found that they had a little daily impact on large stocks.
Robinhood reported in May 2020 that it had raised $280 million in venture investment from Sequoia Capital at a pre-money valuation of $8.3 billion, and three months later, on August 17, the business announced a $200 million Series G funding round from a new investor, D1 Capital Partners.
The FINRA fined Robinhood $57 million in late June 2021, and it was forced to pay $13 million in restitution to customers who were affected by outages and deceptive statements in March 2020. This was the greatest FINRA penalty in the organization's history.
On July 29, 2021, the company went public on the Nasdaq under the ticker HOOD. The opening price was $38, but it quickly sank to $33.35 before beginning to rebound and reaching an all-time high of $85. Following that, it plummeted after facing increasing regulatory uncertainty, reporting poor Q3 results, and discovering a security breach that affected 7 million customers. The stock price had plunged 70% in the previous four months and had reached all-time lows below $25 on December 1, 2021. Short-sellers of the stock benefited from the sell-off.
*Last Update: December 2021. Source: Wikipedia