What Happened?
A number of stocks fell in the afternoon session after the broader U.S. stock market declined amid investor caution and a pullback in technology stocks. The main story? Investors are cashing in on a good run and feeling a bit cautious.
After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced.
There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Consumer Subscription company Chegg (NYSE: CHGG) fell 8.3%. Is now the time to buy Chegg? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company Etsy (NASDAQ: ETSY) fell 8.3%. Is now the time to buy Etsy? Access our full analysis report here, it’s free for active Edge members.
- Social Networking company Snap (NYSE: SNAP) fell 5.4%. Is now the time to buy Snap? Access our full analysis report here, it’s free for active Edge members.
- Financial Technology company Robinhood (NASDAQ: HOOD) fell 8.9%. Is now the time to buy Robinhood? Access our full analysis report here, it’s free for active Edge members.
- Online Advertising company Alphabet (NASDAQ: GOOGL) fell 2.6%. Is now the time to buy Alphabet? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Robinhood (HOOD)
Robinhood’s shares are extremely volatile and have had 58 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 7 days ago when the stock dropped 6.7% on the news that its third-quarter 2025 results, despite beating revenue and earnings estimates, were overshadowed by concerns about its future profit outlook and the announced retirement of its Chief Financial Officer (CFO). The company reported impressive year-over-year revenue growth of 100% to $1.27 billion, and its GAAP earnings per share of $0.61 comfortably beat Wall Street's expectations. However, investors seemed to focus on the less positive aspects of the report. Robinhood guided for full-year expenses to be at the top end of its previously provided range, implying future profits could be at the lower end of expectations. Adding to the uncertainty, CFO Jason Warnick announced his intention to retire next year, a move that can create investor unease about leadership stability. The combination of these factors appeared to outweigh the strong headline numbers, leading to the stock's decline.
Robinhood is up 206% since the beginning of the year, but at $120.86 per share, it is still trading 20.7% below its 52-week high of $152.46 from October 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 $3,471.
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