Is Robinhood Stock A Buy Right Now Ahead Of Its First Earnings Report?

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Robinhood Markets (HOOD) is the popular stock market-trading app among young and first-time investors and traders. After the company's hyped IPO on July 29, is Robinhood stock a buy in the current stock market rally?

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Robinhood Stock IPO

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). Excitement around cryptocurrencies like Bitcoin also fueled interest in the app.

"While we are only six years into our journey, we have already seen profound transformations in how people think about their money," Chief Executive Vlad Tenev and Chief Creative Officer Baiju Bhatt said in written remarks with the Robinhood IPO filing.

"The next generation of investors is younger and more diverse than ever before and finance is now as culturally relevant as music and the arts," the executives said.

Robinhood Stock Fundamental Analysis: Huge Sales Growth

The company had over 22 million funded accounts at the end of the first quarter. More than half of the customers' funding accounts said Robinhood was their first brokerage account, the company said. It has $81 billion in assets under control.

Robinhood will report Q2 earnings on Wednesday after the stock market close. Analysts expect the company to lose 15 cents per share. Revenue is expected to surge 114% year over year to $521 million. In the year-ago period, Robinhood earned 7 cents per share on sales of $244.2 million.

The company says it expects to report second-quarter revenue between $546 million and $574 million. That's up 123% to 135% from the year-ago period. However, Robinhood estimates a net loss in the range of $487 million to $537 million in the second quarter, compared with a small profit in the second quarter in 2020.

HOOD Stock News

On Aug. 5, Robinhood said various shareholders will sell up to 97.9 million shares over time. The maximum selling price for Robinhood stock will be 35.12 for the offering, which will generate proceeds for the shareholders of up to $3.44 billion. In response, Robinhood stock plunged over 27%, giving back a large portion of the previous session's 50% surge.

Robinhood Stock Price And Technical Analysis

Robinhood stock price dropped over 2% Monday, trading around 49.50. Shares are about 40% off the all-time high set on Aug. 4 at 85. Keep an eye out for a new base to form, which would offer the stock's first buy point.

According to the IBD Stock CheckupHOOD stock shows a mild 43 out of a perfect 99 IBD Composite Rating. The Composite Rating helps investors easily measure a stock's fundamental and technical metrics. Weak IBD Composite Ratings are normal for new issues.

Is Robinhood Stock A Buy Right Now?

Robinhood stock is one of the top IPO stocks to watch in the current stock market rally. The company boasts huge sales growth in recent quarters, and the company's potential is encouraging amid the surging popularity of stock trading among young investors. Shares are far from their post-IPO highs and there is no current buy point, so the stock isn't a buy right now. Wait for the stock to form its first base, which would offer an initial buy point.

For more leading stocks and stocks approaching buy points, check out IBD Stock Lists, like Stocks Near A Buy Zone. To see the current stock market trend, check out IBD's signature daily analysis, The Big Picture.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.

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