HOOD Stock Fans Now Have a $31.1 Million Reason for Hope

Famed investor Cathie Wood is undeterred by the ongoing drop in Robinhood (NASDAQ:HOOD) stock. In fact, she doubled down on her investment in the online brokerage by purchasing $31 million more of its stock last week.

Robinhood stocks: app logo seen on smartphone on US dollar banknotes
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Investors who have held onto HOOD stock even as it has fallen 26% year to date and 63% in the past six months can take comfort knowing that Wood, who runs Ark Invest, has been a net buyer of Robinhood shares during the plunge rather than a net seller.

HOOD stock, which came public last July, is currently trading at $13.04 a share, which is 85% below its all-time high of $85 reached in August shortly after its initial public offering.

What Happened With HOOD Stock

Wood bought 3.5 million shares of HOOD stock on Jan. 28 as the share price fell sharply following disappointing quarterly earnings. Robinhood has also been a victim of ongoing market volatility. Wood’s ARK Innovation ETF (NYSEARCA:ARKK) added 2 million shares of Robinhood stock at a low price of $9.94. Two of her other exchange-traded funds accounted for an additional 1.5 million share purchases.

The latest slump in HOOD came after the company reported a worse-than-expected fourth quarter loss of $423 million after markets closed on Jan. 27. Robinhood also said that its near-term revenues would come in sharply lower than previous forecasts. There is currently a big short position in Robinhood stock. The latest numbers from S3 Partners indicate that bets against the shares total $476 million, or 10.9% of the float.

Why It Matters

Robinhood’s stock has taken a massive hit in recent months along with other retail investor favorites, such as GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). That Cathie Wood is buying more HOOD stock as it falls can be seen as a vote of confidence in Robinhood.

However, Wood herself has been under fire in recent months. Why? She has maintained conviction in a number of richly valued tech stocks that were popular during the pandemic but have since fallen 50% or more. Wood’s ARKK fund is down nearly 25% year to date and has fallen 50% in the past 12 months on continued weakness in a number of the fund’s key holdings, including Robinhood.

Yet Wood remains undaunted in her conviction, saying last week the “innovation is on sale” right now. She believes it is only a matter of time before the market bottoms and her holdings begin to rise.

What’s Next for Robinhood

The market volatility seen over the past month looks likely to continue, and companies like Robinhood could fall even further. When they bottom — and whether they recover — is anyone’s guess. While it is interesting that Cathie Wood is standing by HOOD stock for the time being, investors should keep in mind that her own funds are being crushed along with the stocks she is doubling down on.

On the date of publication, Joel Baglole did not have (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.


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