Cathie Wood Is Doubling Down on Robinhood (HOOD) Stock. Should You?
Robinhood (NASDAQ:HOOD) stock is up more than 20% in the past month, driven by the company’s third-quarter earnings. Meanwhile, Ark Invest CEO Cathie Wood has been buying shares of HOOD through her exchange-traded funds (ETFs).
For Q3, revenue tallied in at $361 million, up 14% sequentially but falling short of the analyst estimate for $362 million. Earnings per share came to a loss of 20 cents as well, equivalent to a net loss of $175 million. However, that beat the estimated loss of 31 cents.
Further, transaction-based revenue increased 3% sequentially to $208 million while equity and options transaction revenue saw sequential gains of 7% and 10%, respectively. On the other hand, though, crypto transaction revenue totaled $51 million, down 12%. A highlight of the earnings report was net interest revenue, which grew 73% to $128 million on the heels of the rising federal funds rate.
CEO and co-founder Vlad Tenev added the following in the report:
“We delivered on top feature requests for customers including advanced charts, options in cash accounts, instant withdrawals and our self-custody, web3 wallet. In the next week, we are raising the yield on uninvested cash for Gold members – making it one of the best rates in the industry.”
With that in mind, let’s get into the details of Wood’s purchases.
HOOD Stock: Cathie Wood Doubles Down
Since Oct. 28, Cathie Wood has purchased 537,663 shares of HOOD stock, including 343,623 shares on Nov. 2, the day Robinhood reported earnings. These purchases were made through the ARK Fintech Innovation ETF (NYSEARCA:ARKF) and the ARK Next Generation Internet ETF (NYSEARCA:ARKW). In addition, the transactions on Oct. 28 were Ark’s first purchases of the stock since July 29.
Following the purchases, Ark now owns a total of 30.02 million shares, making it the 15th-largest position out of all ARK ETFs with a 2.66% allocation.
During the quarter, Robinhood’s crypto trading activity declined, although the company has experienced a resurgence in the past week. This can be attributed to Elon Musk’s acquisition of Twitter, which has caused a subsequent price spike in Dogecoin (DOGE-USD). CFO Jason Warnick noted:
“It’s a quieter time for crypto […] It’s a moment where we’re just continuing to invest in the space, to make sure that we’re well-positioned for when this turns around.”
Wood remains confident in HOOD stock, as evident from her purchases. Still, a bet on the trading platform is ultimately a bet on increased crypto activity and usage among younger audiences. Competition in the brokerage industry is extremely high, so Robinhood must further implement measures to differentiate itself.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.