Robinhood stock has wavered in recent days as investors remain concerned about its steep valuation and slowing growth. HOOD traded at $112.50 on Thursday, slightly below last month’s high of $126.50. So, will the stock retreat or resume its uptrend in October?

Robinhood is facing headwinds and tailwinds

HOOD stock has wavered amid concerns about its valuation, which remains at an elevated level. Seeking Alpha data shows that its forward price-to-earnings ratio remains at 44, much higher than the sector median of 10. This multiple is also higher than the five-year average of 37. 

The company’s other multiples are also substantially higher than the technology and financial sector median. For example, its forward PEG ratio of 2.37 is higher than the sector median of 1.03. 

On the positive side, the company has an encouraging rule-of-40 metric, which is calculated by adding its profit margin and its revenue growth. Its net income margin stands at 42%, while its forward revenue growth rate is 17%, giving it a multiple of 59%.

The most recent results showed that Robinhood’s business continued growing, even as its cryptocurrency business dragged. Its net revenue rose by 32% to $1.31 billion, with its transaction and net interest revenues rising to $776 million and $389 million.  Robinhood’s net income rose by 48% to $573 million. 

The challenge, however, is that its crypto business remained under pressure as the winter continued. Its cryptocurrency revenue dropped by 38% to $100 million as Bitcoin and most altcoins retreated. On the positive side, there are signs that the crypto business is improving. 

Robinhood is working to stimulate growth

Vlad Tenev and the team are working to stimulate growth. One of the new approaches is to launch AI agents that can trade on a customer’s behalf. The agents can also do in-depth research on companies and publish it to clients.

Additionally, some of its recently launched products are doing well. For example, data released this week showed that its event contracts traded in September stood at over 4.4 billion. Its Robinhood Chain product is also seeing strong growth.

More data showed that its equity notional trading volumes rose to $267 billion, while options contracts traded rose to 234 million. Its crypto volume rose to $17 billion during the month. 

Analysts have a relatively bullish outlook on the company. Its average price target among analysts is $131, up modestly from the current $112.50. Some of the most bullish analysts are from companies like Bernstein, JMP Securities, Citizens, and Cantor Fitzgerald.

Robinhood stock price technical analysis

HOOD stock chart | Source: TradingView

The daily chart shows that HOOD has been in a steady upward trend in the past few months. It has remained above the 50-day Exponential Moving Average (EMA), a sign that bulls remain in control. The stock has also formed an ascending channel and the Supertrend indicator. 

These technicals suggest that the stock may remain in this uptrend in the foreseeable future. A move above the key resistance level of $123 will point to more upside, potentially to the psychological level of $150.

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