What Happened?
Shares of financial services company Robinhood (NASDAQ: HOOD) fell 8.7% in the afternoon session after stocks pulled back (Nasdaq -2.0%, S&P 500 -1.5%) amid fresh concerns about trade tariffs. The pullback followed comments from President Trump clarifying the scope of his administration's 25% tariffs on Venezuela. He noted that it would apply to any country that does business with Venezuela. For example, 25% is on top of the already-in-place 20% tariff on China because China imports oil from Venezuela, which could translate to a 45% tariff on some Chinese goods. This announcement could significantly raise the operating costs for affected companies and institutions.
Adding to the market unease, the President announced plans for new tariffs on auto imports before the planned "reciprocal" tariffs on April 2, 2025.
The shares closed the day at $44.72, down 7.1% from previous close.
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What The Market Is Telling Us
Robinhood’s shares are extremely volatile and have had 50 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 9.9% on the news that stocks rebounded (Nasdaq +2.0%, S&P 500 +1.5%) following a report from The Wall Street Journal stating that the Trump administration's reciprocal tariffs, to be announced on April 2, 2025, would be more narrowly targeted.
The market reaction indicated that investors took that as a sign the economic impact of the tariffs, particularly on inflation and growth, might not be as bad as they initially feared. That's a bit of a relief, which likely gave businesses and analysts some space to rethink their outlooks. Earlier, the administration had hinted at much broader tariffs that could have hit any country placing duties on U.S. imports, so this shift was likely a welcome surprise for the market.
Separately, stocks linked to digital assets rose as sentiment in the crypto space picked up, mirroring the improved appetite for risk assets. Notably, Bitcoin, the largest cryptocurrency by market cap, edged close to the $90,000 mark after falling as low as $79,000 earlier in the month.
Also, the crypto industry secured a notable victory in the previous week when the CEO of Ripple Brad Garlinghouse announced that U.S. regulators had dropped a four-year-long case against the company. The lawsuit stemmed from Ripple's $1.4 billion fundraising through the sale of XRP tokens, which regulators had previously classified as securities, subjecting them to strict securities rules. However, it seemed some of these measures were being relaxed.
For context, Ripple was the third-largest cryptocurrency by market cap when this news hit. That's big because it means a lot of traders and investors likely have exposure to it. When a major token like this gets regulatory relief, it can reinforce positive sentiment in the broader crypto market.
Robinhood is up 12.4% since the beginning of the year, but at $44.32 per share, it is still trading 32.1% below its 52-week high of $65.28 from February 2025. Investors who bought $1,000 worth of Robinhood’s shares at the IPO in July 2021 would now be looking at an investment worth $1,273.
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