Robinhood (NYSE:HOOD) stock hit a new 52-week low of $6.81 this morning. The shares of the slumping online brokerage firm are now worth less than the cash it has in its possession.
Specifically, the market capitalization of HOOD stock is $5.8 billion, while its cash as of the end of the first quarter was $6.19 billion, down from $6.26 billion as of the end of last year.
With the value of cryptocurrencies falling sharply and the stock market continuing to be weak, HOOD stock looks poised to continue reaching new lows.
Weak Q1 Metrics for HOOD Stock and Bearish Analysts
Also noteworthy is that the brokerage firm at the end of April reported weak first-quarter metrics. Last quarter, the company’s active user base tumbled 8% versus the fourth quarter. Its revenue slid to $289 million. That’s well below the $522 million of sales that it generated during the same period a year earlier.
“We’re seeing our customers affected by the macroeconomic environment, which is reflected in our results this quarter,” explained the company’s CFO, Jason Warnick.
Additionally, yesterday John Heagerty, an analyst at Atlantic Equities, cut his rating on HOOD stock to “underweight.” The analyst expects Robinhood to be hurt by a resurgence of “pre-pandemic” behavior, and he warned that the company could also be undermined by a recession and the decline in stock prices.
And on June 14, JPMorgan (NYSE:JPM) slashed its price target on HOOD stock from $11 to $7. After Robinhood released its May data, the firm lowered its “trading volume outlook” for the company, The Fly noted. The firm, which kept an “underweight” rating on Robinhood, also cited “regulatory risks” as a reason for its pessimism on the shares.
Indeed, on June 9 Securities and Exchange Commission (SEC) Chairman Gary Gensler’s said he’s considering forcing brokerages “to route individual retail investors’ orders to transact stocks into competitive auctions,” Seeking Alpha reported. Such a change would undermine Robinhood’s business model, which incorporates “payment for order flow.”
On the date of publication, Larry Ramer 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.