Last month, shares of Robinhood (NASDAQ: HOOD) hit the trading market as an IPO. The stock surged for several days to become another fad momentum stock in a wild ride. People poured money into it to chase it higher and then it stalled out and dumped.
You can see the action in this chart.
In some ways when the stock soared last week it was the only thing really happening for those whose main way to find out what is happening in the markets is by loading up their trading app, because the market averages were barely moving. So, they saw Robinhood stock tick up and piled in as it was where the action was at.
And now, today, in the top 100 list of most owned stocks by Robinhood account holders HOOD is number 12.
There are roughly 20 million Robinhood traders, so that is masses of people buying to make it get to number 12.
You can access this list by opening an account with Robinhood.
The problem is the stock is showing the same pattern of past momentum stocks like AMC and GME did when they jumped up. The stock soars in days, peaks, and then simply does nothing, but slowly fade.
It’s likely to happen with HOOD as it is trading at a sky high valuation with a P/S ratio over 20. A reading of 2 is considered to be fairly valued.
AMC jumped up to four on the Robinhood 100 list in June and has been doing nothing ever since.
You gotta be able to jump in and out and do very short-term trading to win at stocks like this or you get caught holding the bag. I prefer buying stocks paying dividends that have real earnings that I think can go up for a long-time.
Like I said in my post yesterday, I’m more interested in commodities and the way they are positioned now and buying stocks like Exxon, paying a 6% dividend than playing the fads.
Who knows where Robinhood will be as a company ten years from now.
Exxon – it’ll be there one hundred years from now.
-Mike
