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Robinhood’s Shares Sore Since Their Public Listing a Week Ago

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Robinhood’s share price reached a high of $84 on 4 August, a staggering 24% above its IPO price of $38. It’s been a week since their listing on the Nasdaq on 29 July. Their debut was a bit rocky, and shares declined by 12% below the IPO and closed at 8% down. 

Robinhood chose to reserve a significant portion of its equity, 35%, to its users. Therefore, more retail investors owned shares on the start of its trading day, which is not normal for traditional IPOs.

This caused a skewed supply/demand, resulting in stocks tumbling below their IPO price. The traditional IPO share allocation usually is well under 10% for investors.

Robinhood’s Shares and controversy

Robinhood doesn’t charge commission for stock trading via its app, but they had their share of controversy this year. The self-regulator FINRA reached an agreement with them to pay over $57 million penalties and $12 million in remittance to its investors. 

The FINRA found that they allowed traders to take high risks, mislead clients with false information, and didn’t protect its customers; they also failed to oversee the technology that supports the app.

Furthermore, they were failing to disclose how they earn revenue. They also played a vital role in the highly publicized GameStop saga. Also, their CEO Vladimir Tenev was publicly grilled for this. 

Robinhood has been dubbed a ‘meme-stock’, and its sudden rise is contributed to its popularity among Reddit’s WallStreetBets traders and is the most talked-about stock on this platform. In addition, other high-profile investors like Cathy Wood’s Ark Innovation ETF that purchased $4.9million in Robinhood shares could be a driver of surging price.

Fidelity reported Robinhood as one of the top traded stocks on Wednesday; volatility was so high during the start of the trading session that shares had to be stopped, and stocks went up by 80% at one stage. Investors are keeping a close eye on Robinhood since its debut listing.

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Justin N. Richards

Justin N. Richards is a Florida-based technical analyst, market researcher, educator, and trader. Justin began his career in Chicago in 2001 performing futures market analysis for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange. He also worked for numerous brokerage firms during that time, all of which hold him in high regard, and he has been providing outstanding analysis services for traders worldwide ever since. Mr. Richards is an expert in the area of market patterns, price and time analysis as it applies to futures, Forex, and stocks. In addition to these talents, he provides educational services for investors looking to improve their analysis and trade skills. Justin has a B.A. in Business Administration from UCLA and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology. Justin’s professional experience, education, and discipline, not only make him an exceptional analyst, they point him out as a reliable, hard working and intelligent business strategist who is dedicated to his craft.
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