Robinhood Markets, Inc. (NASDAQ: HOOD) was rising over 5% on Wednesday ahead of its fourth-quarter earnings report, expected after the closing bell.
The California-based financial services company has soared over 360% in the past 12 months, outperforming the S&P 500, which has gained about 20% over the same period. Robinhood’s surge is partly due to the cryptocurrency bull market that began in late 2023.
Analysts expect the company to report earnings per share (EPS) of 41 cents on revenue of $934.9 million. In addition to Robinhood’s top and bottom-line results, traders and investors will be closely watching its forward-looking guidance for insights into the company’s expected growth trajectory.
When Robinhood posted a third-quarter earnings miss on Oct. 30, the stock dropped 16.7% the following day before reversing course and surging 147% between that date and Monday, when it reached a high of $57.27. For that quarter, Robinhood reported EPS of 17 cents, missing the 18-cent estimate, and revenue of $637 million, falling short of the expected $660.53 million.
From a technical analysis perspective, Robinhood’s stock appears bullish ahead of earnings, trading in an uptrend and forming a potential bull flag pattern. However, it's important to note that holding stocks or options through an earnings report is inherently risky, as stocks can react unpredictably to both positive and negative earnings results.
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The Robinhood Chart:
Robinhood has been trading in a strong uptrend since Jan. 13, and between Feb. 3 and Wednesday, the stock formed a potential bull flag pattern on the daily chart. On Wednesday, it was attempting to break out of the flag formation and move toward Monday’s high.
If Robinhood reacts positively to its earnings report and continues climbing on Thursday, the measured move suggests a potential 19% increase, which could push the stock toward the $63 mark.
Bearish traders will be watching for a possible double-top pattern near the $57 level or a negative reaction to earnings. If Robinhood falls below $48, its current uptrend will be negated, signaling a potential downtrend.
Robinhood faces resistance at $57.27 and the psychological level of $60, while it has support at $53.28 and $49.39.
Photo by Andrew Neel on Unsplash
