- Stock trading app disappoints in public debut…
- Company struggles to sell IPO shares…
- What Vlad hopes about $HOOD buyers…
Robinhood Markets Inc. (NASDAQ: HOOD) seems to be feeling the heat of its controversial trading freeze in early 2021 and recent regulatory pressure with a down debut on Wall Street.
HOOD stock began trading on the Nasdaq today and quickly fell below its IPO price.
Robinhood Markets priced the IPO at $38 per share on Wednesday, choosing the lower end of the range and valuing the company at about $32 billion.
HOOD Stock Excitement Fizzles
Anticipation was swirling for HOOD’s breakout ahead of today’s open, with early expectations for the stock to open at $42 per share — up more than 10% from the IPO price.
But HOOD stock went live at 12:24 p.m. Eastern at $38 per share.
Shares briefly hit a high of $40.25 before tumbling to a daily low of $33.35 less than 20 minutes later.
The stock closed out its first day of trading at $34.82 per share, down 8.37% from the IPO price.
The lackluster debut comes after Robinhood reportedly struggled to sell its IPO shares.
CNBC reported the company and its underwriters didn’t finish allocating its IPO shares until 9 a.m. Eastern.
One source told CNBC, “They’re begging us to take Robinhood shares.”
Vlad Believes in Meme Stock Craze
Robinhood’s popularity and rapid growth over the last year were fueled by retail traders who got into stocks amid the pandemic, exploding with the meme stock craze in early 2021.
Small investors saw the app as the perfect place to trade without having to pay the commission fees other brokers charge.
But the company quickly stepped on its own foot amid the GameStop saga, when they halted buying — but not selling — of meme stocks like GME and AMC.
Since then, the sentiment around Robinhood seems to have turned with longtime market players speaking out.
In a tweet in February, investor Michael Burry of “The Big Short” fame said, “If you do not use #robinhood, you have to see it to understand what #gamification of #stonks/options means. So here it is. If this looks like a serious investing app to you, and NOT a dangerous casino ‘fun for all ages,’ you’ve been #gamified.”
Burry has since deleted his Twitter account.
Charlie Munger said, “Robinhood is beneath contempt. It’s a gambling parlor masquerading as a respectable business. It’s basically a sleazy, disreputable operation.”
And, just ahead of the app’s public debut, Christopher Bloomstran warned about the dilution of the IPO.
But even as retail traders say they feel scorned by Robinhood, CEO Vlad Tenev says the meme stock craze is “a real thing.”
In an interview with CNBC, Tenev said, “I think it’s a real thing. There’s customers that love these companies, they want them to thrive. You’re seeing meme stocks also get resources that allow them to hire really good management teams, in some cases, and then build for the future.”
He also said he sees the surge of retail traders changing the market forever.
“I don’t know if people have understood the ramifications of what high retail participation in the markets means but I think fundamentally it’s a very good thing.”
In a separate interview with Bloomberg, Tenev said he wants HOOD stockholders to be long-term investors.
“We’re not thinking about anything that happens in the market, especially in the short term. The goal is to keep making great products, to keep improving the service and keep growing with customers.”
He also addressed the latest investigation against him, as FINRA probes whether he should register with the agency.
Tenev said he’s the CEO of the parent company, not the actual broker, that executives for Robinhood Markets hold the proper FINRA licenses.
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