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Taking a Look Under the HOOD

On Wall Street, there are good stocks, and there are bad stocks.

We’ve all seen stocks that fluctuate with the market, going up and down on a regular basis and taking investors for one heck of a roller coaster ride along the way.

We’ve even covered many of these types of stocks right here in this newsletter!

Yes, on Wall Street there are good stocks, and there are bad stocks…

But then there are absolute dumpster fires!

Guys, Robinhood Markets, Inc. (HOOD), the discount brokerage platform, is the latter of those options.

Why do I say this?

Take a look at this graphic that media news company Chartr published…

Robinhood Markets, Inc. (HOOD) Metrics – Source: Chartr.co

This chart perfectly summarizes the investment case for HOOD in four charts. 

Robinhood: A Reflection

Founded in 2015, Robinhood is an American financial services company known for pioneering commission-free trades of stocks, exchange-traded funds and cryptocurrencies via its mobile app.

HOOD saw tremendous growth in its first few years, and it wasn’t all that long ago when it seemed everyone wanted to get a piece of this company.

It didn’t take long, however, for that growth to begin to slow.

HOOD turned negative in Q3 in the middle of last year, and per-user revenue growth began to rapidly decline.

The combination of fewer users and less revenue per user led to a steep 35% drop in revenue in the third quarter.

Now, guys, when it comes to growth stocks, Wall Street has absolutely zero tolerance for shrinking performance!

A slowdown in sales or revenue growth is enough to tank a high-flying growth stock.

A decline in sales or revenue, however, is just unacceptable.

As of this week, HOOD stock was down 87% from its highs.

Robinhood User Reviews – Source: Chartr.com

This is an absolute meltdown in only a matter of six months!

And it doesn’t help when the company’s own users continue to bash the app with negative reviews, as seen in the chart above.

One Piece of Advice…

Today, after leaving a sour taste in your mouth by reviewing these downward trending Robinhood stats, I leave you with one piece of advice… 

Before buying a stock, it is important to look under the hood (pun intended).

You don’t need a master’s degree in financial modeling or even the ability to read balance sheets to be successful in this industry…

All you need to do is look for growth, preferably accelerating growth, in sales and earnings.

If the numbers are trending down, the stock will likely do the same… if it isn’t already.

Follow these simple guidelines, and you’ll be on the right track towards success and financial freedom.

Embrace the surge,

Ross Givens

Editor, Stock Surge Daily

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Ross Givens
Ross Givens

I bought my first stock when I was 12 years old. It was Microsoft. I’ve been a registered financial advisor. I’ve worked as a stock broker. I ran a managed fund. I was a Vice President at JP Morgan with Series 7, Series 66 and Series 3 securities licenses. I’ve been featured on Fox Business, CNBC, Bloomberg, and a bunch of other networks. The only thing I enjoy more than making money, is helping YOU make money.

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