Is Robinhood stock a good buy after Bankman purchase?
The Robinhood (NASDAQ: HOOD) stock price continued its bullish rally on Friday as investors went bargain hunting. The stock jumped to a high of $10.64, which was the highest level since May 5th. It has risen by more than 36% above the lowest level this month.
FTX founder buys HOOD shares
The main catalyst for the current HOOD stock price is the decision by Sam Bankman to acquire a large stake in the company. He acquired a 7.6% stake in Robinhood, making him the biggest solo investor in a company that is now valued at more than $8 billion.
Analysts believe that Bankman may be up to something with this acquisition. For example, he may be deciding to push for a merger between the two firms. Such a merger would create a large financial services company that focuses on both stocks and digital currencies.
In its most recent deals, FTX was valued at more than $25 billion while FTX US has a private valuation of over $7 billion. Of course, these valuations have likely eased a bit considering that the performance of cryptocurrencies has been bad.
His acquisition comes at a time when the Robinhood stock price has collapsed by more than 80% from its all-time high. The most recent catalyst was the company’s earnings, which revealed that its growth was slowing.
The firm said that its equities under custody rose to $68.5 billion while cryptocurrencies rose to about $19.7 billion. Cash rose to $9.2 billion while securities lending declined by 31% to $24 million.
So, is Robinhood a good investment? While the company has a good product, it faces tough challenges ahead. For example, stocks and cryptocurrencies have been in a strong downward trend. This will incentivize more day traders to stay out of the market. Also, with the Fed tightening, these assets have more downward room to run.
Robinhood stock price forecast
The daily chart shows that the HOOD stock price has been in a strong downward trend in the past few months as demand for its services has eased. The stock remains below the 25-day and 50-day moving averages while the MACD has moved below the neutral level.
Therefore, this jump seems like it is a dead cat bounce. As such, there is a possibility that it will resume the bearish trend in the near term. If this happens, the next key level to watch will be at $8.
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