Cramer's long been a champion of Robinhood, viewing the company as a "gateway to riches" for everyday investors. Robinhood's easy-to-use app, combined with a little homework, was supposed to be a boon for younger investors to get in the game and start owning a piece of America.
However, the average Robinhood account holder has just $250 in their account, and they're not investing in blue-chip stocks. Instead, most users are speculating in the riskiest of meme stocks along with the most speculative of cryptocurrencies.
Are Robinhood users really investing, or are they treating the platform like a game? Cramer cautioned that Robinhood needs to get back to basics, otherwise their business model simply won't be sustainable.
Let's check on the charts and indicators.
In the daily Japanese candlestick chart of HOOD, below, we can see that the shares have been under selling pressure from early August. Prices are trading below the declining 50-day moving average line. We do not have enough price history to calculate the 200-day line yet.
The On-Balance-Volume (OBV) line is pointed lower, telling us that sellers of HOOD have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish too.
In this daily Point and Figure chart of HOOD, below we can see a potential downside price target in the $34 area for starters.
Bottom-line strategy: I lived through the 1973-74 stock market decline and dozens of brokerage firms went out of business or merged with bigger shops as the DJIA was cut in half. I prefer to do whatever securities business I do with a company that has been around for decades. Just saying. In the meantime, I find the charts of HOOD bearish and pointed lower. Avoid the long side.