Based on the definition of penny stocks, we’re usually referencing stocks under $5. In other cases, traders may think of them as OTC stocks only. But there are plenty of penny stocks trading on the NYSE and NASDAQ exchanges. Are they worth the risk? Should you buy them? Can they become more prominent companies and trade above the $5 threshold? The answer to all of these questions is, Yes but it all depends. Just because a company is starting out trading as a penny stock doesn’t mean they’re “doomed” to remain a low-priced public company forever. Even if stocks fall below the $5 threshold, that doesn’t mean the underlying companies are going out of business.

We wrote an article titled 10 Top Penny Stocks To Buy Under $5 That Are Household Names. We discussed high-profile companies – household names – trading as penny stocks. Does this mean they’re set to fail? That’s something yet to be seen. But since they’re now trading at much lower levels, it begs the question, “What now?”

Some traders search for stocks teetering on the “edge” that could become penny stocks. They’ll hunt for “value plays” that might offer a more realistic price level after so many stocks became so inflated during the last few years of bullish action. Nio Inc. (NYSE: NIO) is one of the more notable companies that went from a “household name” to penny stock and ultimately rebounded strongly above the sub-$5 range for good (so far). Now some traders wonder, will HOOD stock be the next big name to join the ranks of penny stocks?

Will HOOD Stock Become A Penny Stock?

Shares of Robinhood Markets Inc. (NASDAQ: HOOD) currently sit above $11, more than 100% above the $5 threshold. But the constant selling pressure and negative press have played a leading role in HOOD stock’s stock market saga. When the company made its public debut, shares exploded to highs of $85. Like many of last year’s big tech IPOs, things haven’t been nearly as bullish during the following months. Here’s the month-by-month performance of HOOD stock since reaching its IPO last July:

DATEPRICE @OPENDATEPRICE @CLOSEPERCENTAGE CHANGE
7/29/2021$388/30/2021$43.64+14.84%
8/31/2021$42.039/30/2021$42.08+0.12%
10/1/2021$42.3611/1/2021$34.85-17.73%
11/2/2021$34.7212/1/2021$23.93-31.08%
12/2/2021$23.961/3/2022$18.44-23.04%
1/4/2022$18.392/1/2022$14.65-20.34%
2/2/2022$14.593/1/2022$11.77-19.33%
3/2/2022$11.774/1/2022$13.50+14.70%

In breaking down the basic HOOD stock price performance data since the public debut, it has finished three periods with a gain, while the rest have been at a loss. Furthermore, during the periods where HOOD stock has ended with a gain, on average, that gain is roughly 9.89%. When it comes to periods where HOOD stock price has returned a loss, the average loss is 22.30%. Expanding on this data further, overall, HOOD stock price has lost about 10.23% period-over-period since July 29, 2021.

Robinhood Markets HOOD stock chart

HOOD Stock Forecast

With earnings coming up at the end of the month, it is also worth noting what the HOOD stock forecast is right now. Are analysts concerned about the HOOD stock price performance since its IPO, or do they see potential in the stock?

  • Goldman Sachs HOOD Stock Forecast: Sell, Price Target sits at $13
  • Keybanc HOOD Stock Forecast: Overweight, Price Target Cut From $50 to $25 Earlier this Year
  • Mizuho HOOD Stock Forecast: Buy, Price Target Cut From $55 to $20 Earlier This Year
  • JMP Securities HOOD Stock Forecast: Market Outperform, Price Target Cut From $45 to $41
  • Deutsche Bank HOOD Stock Forecast: Hold, Price Target Boosted From $12 to $14 in February after a Target Cut From $15 to $12 in January
  • Rosenblatt HOOD Stock Forecast: Buy, Price Target Cut From $25 to $15
  • Barclays HOOD Stock Forecast: Equal-Weight, Price Target Cut From $42 to $12
  • Morgan Stanley HOOD Stock Forecast: Equal-Weight, $15 Price Target

Despite the 85%+ drop in price since last year’s $85 high, none of the analysts listed have set targets within the sub-$5 range (so far). Robinhood also launched a few new cryptocurrencies on its platform this month, including the latest cheap meme coin, Shiba-Inu. The mobile trading platform restricts access to OTC penny stocks, but users can purchase a coin trading at fractions of a penny as of this week. The current price of Shiba-Inu is below $0.00003.

Should You Buy HOOD Stock?

This isn’t the complete breakdown of Robinhood Markets. It’s instead a glimpse at recent price performance and the current forecast from analysts. If you’re asking if you should buy HOOD stock, there are many additional factors to account for, and with upcoming earnings, the stakes might be even higher depending on what gets reported.

In its last earnings report for Q4 and FY 2021, the company missed Adjusted EPS estimates and cryptocurrency trading revenue. It also took a hit in monthly active users, which fell to 17.3 million. In the third quarter, Robinhood reported 18.9 million and was far below what analysts at Factset expected to come in at (19.8 million). With the GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC) short-squeezes behind it, helping it post a record 2021, this year and the first half could be the proving ground for the newly minted public brokerage platform.

Looking ahead to this year, Robinhood has already outlined several plans in its last earnings update.

Robinhood 2022 Strategy Outline

  • Robinhood’s plan is focused on three core areas: being the best place to get started investing, helping first-time investors grow into long-term investors, and continuing to serve advanced investors with the power and simplicity they need.
  • Robinhood will build products intended to help with long-term investing, aiming to make it easier for customers to build for their futures no matter where they are in their financial journeys. Teams are already hard at work developing tax-advantaged retirement accounts, which will begin rolling out to customers mid-year.
  • It will invest in spending and savings products and, in the coming months, will introduce a new experience for day-to-day spending to help customers build a portfolio as an outcome of spending.
  • Robinhood plans to offer customers ways to move their money faster, starting with introducing instant debit card deposits and withdrawals in the next few months.
  • Robinhood has set aggressive goals to start opening its crypto platform up to customers internationally in 2022. The company believes in the immense potential of the crypto economy and sees a big opportunity in serving customers across the globe.

The company expects to generate total revenue of less than $340 million in Q1, 2022. With earnings around the corner, is HOOD stock on your list to buy or avoid?


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