Robinhood’s Roller Coaster IPO

Aug 08, 2021 | How to swing trade IPOs and what you need to watch out for

Weekly Newsletter - Week of 8.08.2021

Robinhood’s Roller Coaster IPO 

Robinhood Holdings, now listed as HOOD, recently became a publicly-traded company. We've previously reported on the polarizing fintech's IPO listing in prior newsletters (which can be found here). HOOD's listing has been on investors' radar for months, given its proven track record of bringing a new crowd of investors into the stock market. To date, HOOD has already risen 57% since its IPO. Investors were initially unsure how HOOD would trade after going public. Once assumed to be an extremely popular ‘meme stock’, HOOD has been battling very public PR concerns leading into, and through, its IPO. 

This week, Robinhood officially cemented its meme status. Thousands of retail investors pumped the stock price higher, then lower, and higher again. HOOD appears to be yet another stock prone to violent and wild price swings- this is becoming the norm when trading shares of HOOD. The stock jumped as much as 18% on Friday alone! This came after a 28% drop just 24 hours before. When investing in new IPOs, it's important to remember a large number of shares were purchased by 'insiders'. These are investors who put capital into the company before it was a publicly-traded entity. These early-stage investors are required to hold the stock for a certain amount of time before they can sell. When that lockup period ends, we tend to see an influx of selling as the share price has generally soared exponentially higher as a public company. 

Investors should view Robinhood like they view crypto or any other meme related stocks. We expect wild price swings to continue for the foreseeable future. When that lockup period inevitably ends, those early insiders are set to pocket huge gains from the recent rally. Though a large portion of selling will inevitably drive the price down lower, there's obviously a lot of interest in Robinhood shares. We've seen volume skyrocket while top investors like Cathie Woods have also taken positions in the rising fintech. As we’ve stated in the past, this is another stock that’s not known for trading based on fundamental analysis. 

Crypto’s Resurgence 

Bitcoin, and many other major tokens, have jumped ~10% in the last 10 days as it seems investors are finally comfortable piling back into the cryptocurrencies. Bitcoin is now trading above $40,000 for the first time since May. If you remember from a previous newsletter, China’s crackdown on miners was one of the key reasons for the latest drawdown as we noted here. BTC is now showing strength as it’s broken out of its downward channel that we’ve been watching for the last several months. If Bitcoin can hold above $40,000, a new base could be forming. We've also seen heavy volume on bullish calls, especially with Ethereum- which is another potential sign of a continued resurgence for the crypto space. 

Weekly Swing Trades

PNRG (Prime Energy)

October 2, 2022

Entry Price:

80.62

Stop Price:

76.85

Target Price:

88.04

Time Frame:

1 Week Hold

Expecting a short-term bump after a recent OPEC+ announcement regarding the a supply constraint to oil. The constraint would result in ~1M less barrels of oil per day, which should cause a price jump. Low RSI and bouncing off our 250 day moving average, both hallmarks of a good swing trade.

DV (Doubleverify)

October 2, 2022

Entry Price:

27.75

Stop Price:

26.75

Target Price:

29.00

Time Frame:

3 Week Hold

Using our moving averages heavily on this swing trade, look for continued strength as we try to notch out a 6-8% gain. Specifically, we are taking advantage of of a recent cross over in the 50 day moving average. Last week closed down, so wait for confirmation of a reversal.

Pinterest Hammered 

Popular social media app Pinterest saw its shares take a beating after reporting earnings this week. The stock is down over 25% from all-time highs. The selloff comes after they reported a decline in monthly active users within the United States. Shares dropped as much as 18% last Friday, signaling the worst day of trading since March 2020 (the start of the pandemic). Despite slowing user growth, PINS reported an impressive quarter for revenue numbers which jumped 125% YoY. This was fueled by a surge in advertising, as the reopening economy allowed many companies to once again allocate funds to marketing. We’ll be watching to see if the user growth was a one-off quarter or a growing concern for Pinterest and its shareholders. After the massive selloff, Pinterest now treads at a fare more appealing valuation, but with heightened risk and underlying volatility. 

Upcoming Economic Reports

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Weekly Watchlists

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Weekly Review

Market Performance- Week of 09.25.2022

Recent Winners

SBUX (Starbucks)

SBUX (Starbucks)

Entry Price:

85.00

September 11, 2022

Price at High:

89.90

Return for Members:

5.76%

Timeline:

2 Month Hold

Strong momentum over the last few weeks. Watch for a mean reversion, but if moving averages stay consistent look for an early play to open the week.

PNRG (Prime Energy Resources)

PNRG (Prime Energy Resources)

Entry Price:

83.20

September 4, 2022

Price at High:

100.00

Return for Members:

20.19%

Timeline:

3 Week Hold

PNRG had a drawdown to historical levels of support (around the 100 day moving average). Looking to make an entry in the coming days as we also have macro tailwinds with the energy crisis in Europe.

PYPL (Paypal)

PYPL (Paypal)

Entry Price:

87.00

August 28, 2022

Price at High:

103.00

Return for Members:

18.39%

Timeline:

4 Week Hold

Playing off the dip in June, we're starting to see momentum as the 50MA is crossing over the long-term averages. Look to for momentum to continue and an early entry on Monday.

Recent Watchlist Winners

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