HOOD: Undervalued Given Future Prospects
Updated
Oh, Robinhood. What happened to you? Once the staple of every retailer's trading boom and bust, now a lousy 4 star brokerage in the app store. People will call someone a shill for even thinking about you. You turned off the buy button at the climax of trading history, you bitch, and now you're paying the price.
And that's exactly why I think HOOD is a good investment.
Sentiment around Robinhood is incredibly low. You'll get shat on for even mentioning them on Reddit, particularly amongst the tin-foil hat-wearing members of r/superstonk and the like. I don't mean to disparage, we all have our convictions. But this suppressed stock price due to overwhelming sentiment is not logical. What about the 10's of millions of teenagers that will turn 18 over the next 1-7 years? Will they remember
GME? Will you tell them the fireside tale of how grandpap almost became a millionaire until every brokerage colluded with hedge funds and market makers to screw the little guy?
The answer is no. They will not remember, they will not care. And just as Robinhood was popular before, so shall it be popular again.
It is only unpopular because it happened to be the most-used brokerage by young traders during the GME era. I took a poll on my YouTube Community tab to see how many hate Robinhood. 26% said they hated Robinhood. The rest either love them or were indifferent. Then I took a similar poll, this time asking how many moved to WeBull after Robinhood turned off the buy button, and 20% of my audience said they did.
Pay attention here, that's not 20% of 25% that switched from RH to WeBull. That's 4/5ths of those who hate RobinHood who switched to WeBull.
BUT WAIT
WeBull ALSO turned off the buy button. That's right folks, they were no better as you can read here: yhoo.it/3WH0mwn
And yet they get no hate. 5 stars in the app store. That, my friends, is a logical fallacy. Or something. Something like that. It's at least dumb.
They were not the only ones, and even trillion dollar brokerages like TD Ameritrade had to limit trading in some ways, like increasing margin requirements to 100%.
So 4/5ths of the people who hate RobinHood moved to a brokerage that did the EXACT same thing. WeBull is only ever criticized for being a China-based company, but never for killing the switch on meme stock buyers. Same with Interactive Brokers. All because of a 2-day settling requirement at the DTCC and the lack of funds to post collateral for those shares. If that sentence didn't make sense to you, don't worry. Just trust me, bro.
So the negative sentiment is overblown, they weren't the only brokerage to turn off the buy button, it was only because they are a smaller brokerage with less capital, and the younger generation won't remember. Great. But it doesn't matter if the younger generation doesn't remember if
HOOD goes insolvent by the time they get sucked into their yummy UI. So will they?
I don't know. Genuinely.
As of Q3 2022, they have about 66B in straight cash, and the stock is currently sitting at a market capitalization of 7b. This means the majority of the market cap is a result of cash. For those in the back, the present value of any asset is the discounted future cash flows it creates. So Wall Street is pricing in basically no future for RobinHood. Is this possible? Entirely. They are a money-losing company with a pretty fucking terrible marketing team. However, over the last 4 quarters,HOOD's net income has gone from a chilling -1.32b to a much more palatable -175m. If they stayed at that level, with all else held equal, they would last 8 years. That's enough time for the younger generation to get sucked in, and it's enough time for management to turn the ship around.
Of course there are headwinds. Trading is more fun when stocks only go up. But the risk-reward is TOO good not to at least take a bite. Sure, you might lose whatever you put intoHOOD, but with every value-style investment, the probability of failing is usually higher. But if you win... you win BIG.
Not to mention, we have yet to see the results of their inclusion of IRA's and their 1% match which may help draw in some desperately needed customer's with larger deposits.
Risk a little, potentially win a lot. That's what I see. This is no near-term bet. It is a long-term play that I imagine will take years to unfold. But you have to buy shitty looking stocks that you have convictions in sometimes, otherwise you'll never be the equivalent of the guy who bought AAPL at $2.00.
Lastly, this could also be an acquisition play. It's no far-fetched thinking to suggest that some larger brokerages would love to absorb the post-GME leftovers.
A based and controversial take from ya boi,
InTheMoney
And that's exactly why I think HOOD is a good investment.
Sentiment around Robinhood is incredibly low. You'll get shat on for even mentioning them on Reddit, particularly amongst the tin-foil hat-wearing members of r/superstonk and the like. I don't mean to disparage, we all have our convictions. But this suppressed stock price due to overwhelming sentiment is not logical. What about the 10's of millions of teenagers that will turn 18 over the next 1-7 years? Will they remember
GME? Will you tell them the fireside tale of how grandpap almost became a millionaire until every brokerage colluded with hedge funds and market makers to screw the little guy? The answer is no. They will not remember, they will not care. And just as Robinhood was popular before, so shall it be popular again.
It is only unpopular because it happened to be the most-used brokerage by young traders during the GME era. I took a poll on my YouTube Community tab to see how many hate Robinhood. 26% said they hated Robinhood. The rest either love them or were indifferent. Then I took a similar poll, this time asking how many moved to WeBull after Robinhood turned off the buy button, and 20% of my audience said they did.
Pay attention here, that's not 20% of 25% that switched from RH to WeBull. That's 4/5ths of those who hate RobinHood who switched to WeBull.
BUT WAIT
WeBull ALSO turned off the buy button. That's right folks, they were no better as you can read here: yhoo.it/3WH0mwn
And yet they get no hate. 5 stars in the app store. That, my friends, is a logical fallacy. Or something. Something like that. It's at least dumb.
They were not the only ones, and even trillion dollar brokerages like TD Ameritrade had to limit trading in some ways, like increasing margin requirements to 100%.
So 4/5ths of the people who hate RobinHood moved to a brokerage that did the EXACT same thing. WeBull is only ever criticized for being a China-based company, but never for killing the switch on meme stock buyers. Same with Interactive Brokers. All because of a 2-day settling requirement at the DTCC and the lack of funds to post collateral for those shares. If that sentence didn't make sense to you, don't worry. Just trust me, bro.
So the negative sentiment is overblown, they weren't the only brokerage to turn off the buy button, it was only because they are a smaller brokerage with less capital, and the younger generation won't remember. Great. But it doesn't matter if the younger generation doesn't remember if
HOOD goes insolvent by the time they get sucked into their yummy UI. So will they? I don't know. Genuinely.
As of Q3 2022, they have about 66B in straight cash, and the stock is currently sitting at a market capitalization of 7b. This means the majority of the market cap is a result of cash. For those in the back, the present value of any asset is the discounted future cash flows it creates. So Wall Street is pricing in basically no future for RobinHood. Is this possible? Entirely. They are a money-losing company with a pretty fucking terrible marketing team. However, over the last 4 quarters,
HOOD's net income has gone from a chilling -1.32b to a much more palatable -175m. If they stayed at that level, with all else held equal, they would last 8 years. That's enough time for the younger generation to get sucked in, and it's enough time for management to turn the ship around. Of course there are headwinds. Trading is more fun when stocks only go up. But the risk-reward is TOO good not to at least take a bite. Sure, you might lose whatever you put into
HOOD, but with every value-style investment, the probability of failing is usually higher. But if you win... you win BIG.Not to mention, we have yet to see the results of their inclusion of IRA's and their 1% match which may help draw in some desperately needed customer's with larger deposits.
Risk a little, potentially win a lot. That's what I see. This is no near-term bet. It is a long-term play that I imagine will take years to unfold. But you have to buy shitty looking stocks that you have convictions in sometimes, otherwise you'll never be the equivalent of the guy who bought AAPL at $2.00.
Lastly, this could also be an acquisition play. It's no far-fetched thinking to suggest that some larger brokerages would love to absorb the post-
GME leftovers.A based and controversial take from ya boi,
InTheMoney
Note
Added LEAPS when it dipped down to $8. Providing services to users across the pond should not be underestimated. I still view this stock as slightly undervalued in the short-term and severely undervalued in the long-term.Trade active
Sold my LEAPS for about 2k profit. Doubled down with 13 $8 1/16/2026 calls. My long-term conviction is high and my position reflects this.Note
Robinhood Markets attracts $1.1 BILLION with its 1% match for transferred retirement accounts. HOOD is up almost 8% on the day.Note
Switched to about 16k in shares, decided I was not certain when this thesis will play out on the chart. If it takes years, I'd rather not be destroyed by theta over and over again. Just personal preference; it's definitely feasible to keep recycling LEAPS until an upward trend is established.
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