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Robinhood, Netflix, Markets: 3 Things to Watch Into Happy Hour

Let's take a look at the selloff, Robinhood's popularity--or lack thereof--with retail investors and Netflix ahead of earnings.

Well, that's one way to start the week.

The Dow, at its low in intraday trading, was down over 920 points. Both the S&P and Nasdaq were lagging too. 

So let's talk about what happened and what stocks I'm watching after today's sell-off.

What Caused Monday's Action?

If we're being honest here, this is in the air. You'll see and hear a lot of pundits say that it was X or Y but, based on my conversations throughout today, that's more of a guesstimate than the true answer. 

The one answer that many seem to agree on is that it has to do with the Delta variant. It may not be the entire reason that the markets nosedived, but it's definitely a big factor here. 

I spoke to Ben Truitt, chief executive manager of Spire Fund Advisory, on the phone earlier, and he told me that he believes that this is due to the uptick in COVID cases. 

"... There are some municipalities that are starting to increase restrictions again in the United States. And I think that there is enough of a concern that there's going to be maybe a broader application of restrictions again--whether it's masks or home orders--or whatever it is. I think that's what the market is reacting to right now," he said around noon. 

I point out the time there because we saw the market take another swing lower right after I hung up with Truitt. 

Real Money contributor James DePorre tied the afternoon round of selling to this headline.

And, in case missed it, DePorre had a column out that broke down his thoughts on the markets

"There is still plenty of red on the screens, with around three decliners for each advancer, but the big difference is that the more severe selloffs are occurring in the big-caps while the small-caps are holding up relatively well," he wrote. "It is premature to declare that many small-caps have bottomed, but we now have a more logical and playable bottoming process taking place. The major indices may need to come in more, and that will hurt sentiment but the action today shows that the stock pickers are becoming more interested and are starting to do some buying."

Back to Robinhood

I took the [early] morning to just focus on catching up on the weekend news this morning. So I was a little surprised when I checked my phone to see that Robinhood was seeking as high as a $35 billion evaluation in its upcoming IPO

In an updated S-1 filing with the U.S. Securities and Exchange Commission, Robinhood plans to offer 55 million shares of its Class A common stock in the range of $38 to $42 each. At the higher end of this range, this would raise around $2.3 billion.

Now, the retail investors I have spoken to have no interest in this IPO. None. Zilch. Nada. 

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And maybe that will change because--as I have emphasized with guests time and time again, there should be no emotion in investing--sentiment will lose out to the facts but after reviewing Robinhood's S-1, which we talked about here just a few weeks ago. I am, however, quite skeptical.

Don't get me wrong, I have no skin in the game. Literally. I can't even invest in the IPO. But I've seen commentary around Robinhood as the "retailer's stock" and even my old co-host, Jim Cramer, said that he thinks it could be the "next cult stock."

After doing my research and having many conversations, I do think that there will be a lot of institutional interest in this stock as a way to get a read on retailers, but I don't expect swarms of retail investors to come in and buy this stock. Especially not if Robinhood prices at the top of its range. 

I will, however, be curious to see how Robinhood CEO Vlad Tenev and his team do during their one-hour live stream on Saturday, July 24. Is it too late to woo back investors? Maybe not, but it's going to take a lot more work than words. 

My mom always told me that "actions speak louder than words." But that didn't stop me from jumping into a career where people focus on my words and getting a rib tattoo that says, "words never fail." So, if this situation is handled correctly...words might be enough. 

I guess we'll see. 

And, Finally, Netflix

Okay, I'm going to keep this one short and sweet because I'm sure you'll read 10,000 better takes on the report but let's cover Netflix  (NFLX) - Get Report anyway.

Analysts are looking for earnings per share of $3.14. 

I discussed this in a TikTok earlier today, but there are a couple of things in the report that I'll be looking for. 

One is global subscribers. We saw a positive gain in subscribers during the height of the COVID-19 pandemic as people were stuck at home but what about now? This streaming market is incredibly saturated. 

In total, the company has over 200 million subscribers. And it added 36.6 million subscribers in 2020.

The other thing I'll be listening for, even though I don't know that we're going to get an update on this during this call, is the video game push. 

To me, the announcement of the hire of Mike Verdu, a former Facebook and Electronic Arts executive, is strange to make less than a week before an earnings release.  

I'll be covering the earnings alongside my colleague Stephen Guilfoyle on Tuesday, July 20 after the bell.