PreMarket Prep Stock Of The Day: Robinhood

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

It has been a wild ride for Robinhood Markets HOOD since its Wall Street debut on July 29. After the close on Wednesday, the company released its first earnings report.

Volatile Off IPO: After debuting at its projected price ($38), Robinhood put in place a double-bottom at the $33.30 area during its first two trading sessions. The following day it moved higher, but the rally was capped just under its IPO opening price at $37.98 and backed off to end that session at $37.66.

That set the stage for a massive FOMO rally, which took the issue to its all-time high ($85) and closing high ($70.39) on Aug. 4.

Insiders Want Out Now! It's rare, but after only five trading sessions, a large group of insiders (98 million shares) decided they wanted to ring the register after the huge price appreciation. That instigated nearly a $20 drop on Aug. 5 ($70.39 to $50.97).

Dust Settles: Robinhood attempted to battle back from that horrific day, but could do no better than $60.88 the following day and it was nothing but step-down sellers over the next four days taking the issue to $48.10 by Aug. 12.

Ahead of Wednesday’s report, it was just above that level as it ended the session at $49.80.

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Q2 Report: The company reported quarterly losses of $(2.16) per share, which missed the analyst consensus estimate of $(0.15). The company reported quarterly sales of $565 million, which beat the analyst consensus estimate of $521.84 million by 8.27%.

PreMarket Prep Fundamental Take: When the issue was being discussed, it was trading at the $45 area. The biggest takeaway or unknown from the report was that the company stated it will face “seasonal headwinds” in the upcoming quarter. What the company meant by that is unclear, but in essence, it's providing lower guidance.

Dennis Dick only had one thing to say about the issue: “This company has been in the best environment ever. Everyone sitting at home in a huge bull market, thinking they can make it as a full-time trader. If the markets slow down, they are going to lose a lot of accounts.”

PreMarket Prep Technical Take: The author of this article noted from the price action that the premarket low ($42.72) may not be revisited in the regular session. On the upside, the bottom of Wednesday’s range ($47.20) may act as a resistance level.

After a much lower open ($45.06 vs. $49.80), it ticked lower buy found buyers well ahead of the premarket low at $44.57 and reversed course. As of 1:55 p.m. ET, the ensuing rally has come up shy of Wednesday’s low only reaching $46.88 and is now drifting back towards the low for the session.

The full discussion on the issue from Thursday's show can found here:

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