Robinhood Stock Price Crash is a Gift: Top Reasons to Buy the Dip

Key Insights

• Robinhood stock price has dipped to $76 from last year’s high of $150.
• Cathie Wood continues to accumulate the stock using a dollar-cost averaging approach.
• The company has become a bargain, with its forward price-to-earnings ratio moving below 30

Robinhood stock trades at $76 today, March 4, down 48% from its 2025 highs. This retreat has coincided with the ongoing slump among fintech companies with exposure to the crypto market.

Robinhood’s fall has led to a big wipeout, with its valuation slumping from $136 billion to $68 billion today. Still, this crash could be a gift as the company has several drivers that may lead to a strong rebound in the near term.

Cathie Wood is Buying the HOOD Stock Dip as Wall Street Analysts Remain Optimistic

Some popular names in Wall Street still believe that the HOOD share price will bounce back once the ongoing drop ends.

One of those investors is Ark Invest, the company owned by Cathie Wood. Recent disclosures showed that the company bought 158,587 shares recently and distributed them across three funds: ARKK, ARKW, and ARKF.

Buying additional shares in a company that is nearly 50% below its peak is pure conviction that the stock will eventually bounce back.

Yahoo Finance data shows that institutional investors hold 74% of the company’s stock. 1,821 companies led by Vanguard, BlackRock, JPMorgan, and State Street are the biggest holders, mostly through their funds. Norges Bank holds 10.6 million Robinhood shares.

Most analysts tracking the company have a bullish outlook for the stock. Cantor Fitzgerald, Mizuho, Truist Financial, Bernstein, and Compass Point have recently retreated their bullish view, even as they lowered their target price. The average target among investors is $121, representing a 60% upside from the current level.

Valuation Reset is Underway

HOOD stock price will likely recover because its valuation has gone through a reset this year. The company trades at a price-to-earnings (PE) ratio of 37, well below last year’s high of 69. Its current price-to-earnings ratio is the lowest it has been since June last year.

While the trailing PE ratio is important, we prefer focusing on the forward one, which uses analysts’ estimates. In this case, the company has a forward price-to-earnings ratio of 29, which is lower than its five-year average of 36.

Robinhood’s forward price-to-earnings ratio is much higher than that of the S&P 500 Index, which stands at 23. However, this premium is understandable because of its growing market share in the fintech industry and its revenue and earnings growth.

Based on its fourth-quarter results, analysts tracking the company expect its revenue for this year to grow by 22% and its EPS to grow by 15%. This growth will likely be higher, as the company has recently launched new products, including prediction markets and tokenized stocks, for its international clients. Also, the company has a long track record of beating analysts estimates on earnings.

The premium valuation is also based on its large total addressable market (TAM) as the company is still young. It provides its services in the United States, the United Kingdom, and in the European Union.

It has a chance to expand to other markets in Asia, Africa, and Latin America now that tokenization is removing the barriers that existed in offering US stocks globally.

Robinhood Stock Has Formed an Island Reversal Pattern

At first glance, it is easy to recommend shorting the Robinhood stock as it seems to be in a strong downward trend. It has also formed a bearish flag pattern.

However, a closer look shows that the stock could be on the verge of staging a strong comeback. For one, it has formed an island reversal pattern, which typically signals a reversal.

This pattern forms when an asset creates a large gap, followed by sideways consolidation. In this case, the stock formed a down gap on February 10, the day it published its financial results.

Instead of the downward trend continuing, the stock moved sideways, forming an island- like pattern.

This pattern is occurring at the 61.8% Fibonacci Retracement level, a key price level where rebounds typically occur.

Therefore, the stock is showing signs of bottoming, which will lead to a rebound, potentially to the key resistance level at $100. For this to happen, bulls will need to defend the $70 support level aggressively.

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