Robinhood Outlook: The Bull & Bear Case for HOOD Stock

Stocks to buy

In 2021, Robinhood Markets‘ (NASDAQ:HOOD) shares soared to $50 as a new wave of day traders embraced stock speculation. However, by 2023, the tide had turned, with speculators shifting focus, and HOOD stock, now valued at $9, trades modestly above tangible book value.

On the other hand, Robinhood transformed stock trading, but in 2024, the company’s business model has evolved. Investors, after thorough research, may opt to sell or increase their stake based on their belief in the blockchain revolution and cryptocurrency’s future.

If you’re still torn between investing or ignoring Robinhood, here are both the bull and bear case for the stock to help you decide.

The Bull Case

Robinhood solidifies its commitment to blockchain by launching commission-free cryptocurrency trading in the European Union. CEO Vlad Tenev previously highlighted Robinhood’s association with crypto, and this move reinforces its status as a major crypto platform in 2024.

Mizuho Securities’ Dan Dolev gives a bullish perspective on HOOD stock, issuing a “buy” rating with a $14 price target. Dolev sees Robinhood benefiting from the crypto craze and potential Bitcoin (BTC-USD) ETF-driven gains, citing share gains and a diversified business model.

In 2024, Robinhood stock won’t precisely mirror Bitcoin, but their connection remains strong due to Robinhood’s deep involvement in cryptocurrency and blockchain. Investors should align their stance on Bitcoin with their decision to invest in HOOD stock.

The Bear Case

Coinbase and Robinhood shares dipped as the approval of bitcoin ETFs in the U.S. raised concerns about the impact on crypto trading platforms. Coinbase fell 6.7%, and Robinhood declined 3.5% after bitcoin’s price fluctuated, reaching $49,000 and later dropping to about $46,000. 

The SEC’s approval of rule changes for bitcoin ETFs is a significant development, providing more credibility to the volatile crypto industry and asset class.

Additionally, on the debut of Bitcoin ETF trading, Ark Invest, led by Cathie Wood, sold 31,281 Coinbase (NASDAQ:COIN) shares valued at $4.5 million. The Ark Innovation ETF (NYSEARCA:ARKK) and ARK Next Generation Internet ETF (NYSEARCA:ARKW) collectively unloaded 366,406 Robinhood shares, amounting to over $4 million. 

Amid the spot Bitcoin ETF launch, the stocks of Coinbase and Robinhood both faced declines, leading to Ark Invest’s strategic selling. Coinbase shares closed 17% lower, reaching $130.78, while Robinhood’s price fell 7.86% to $11.02.

Invest, But Be Cautious

Robinhood faced a 14% decline post-disappointing Q3 results, with a 16% drop in monthly active users. Despite being unprofitable and lacking dividends, the $8 share near its 52-week low appears undervalued for growth-focused investors.

Again, if you are bullish on blockchains and Bitcoin in 2024, HOOD is a stock you should own. If not, steer clear of this stock to avoid more potential losses.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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