Shares of financial services company Robinhood surged more than 50 percent on Wednesday during a frenzied trading session as investors hauled up shares after its underwhelming stock market debut last week.
The company’s stocks, which trade under the ticker symbol HOOD, closed at $70.39, off the session high of $85 when the stock was up nearly 82 percent. This earned it the title of ‘the meme of memes’, in a reference to stocks popularised this year by retail investors congregating in online platforms.
Robinhood has become a go-to company for many individual investors in the meme-stock era. Many customers have credited Robinhood with giving them access to the stock market. Others, however, remain upset about the trading restrictions that the company imposed in January, which prevented users from buying shares of meme stocks such as GameStop Corp. during volatility. In advance of Robinhood’s trading debut, many individuals promised that they would avoid Robinhood’s stock, or even make bearish wagers against it. In contrast to this, there were signs, on Tuesday, that interest from individual investors was rising. Robinhood was the most-traded stock on the retail trading platform. The company, however, could not ascertain the exact number of retail investors who participated in Wednesday’s buying.
Robinhood’s stock has risen far above its initial public offering price of $38 per share and has logged its fourth straight day of gains. Its market capitalization rose to $58.8 billion, surpassing that of Twitter, restaurant chain Chipotle Mexican Grill, and asset manager T. Rowe Price. Talks about the stock among retail investors flew high on social media platforms such as Reddit’s WallStreetBets forum, and Twitter, despite its weak market debut last week, when it fell below its IPO price.
“We know from meme stock trading that has happened over the last several months that when there’s a lot of activity on social media, sometimes that will drive a stock higher or lower,” Randy Frederick, Vice-President of trading and derivatives for Charles Schwab, said.
According to Vanda Research, retail trading volume rose tenfold on Tuesday, helping the stock gain 24 percent.
Wednesday marked the first day that investors could trade options on Robinhood shares, another way of betting on the stock. In recent months, options trades by retail investors have contributed to outsize moves in shares of companies like GameStop and AMC Entertainment Holdings. According to Trade Alert Data, some 293,000 contracts changed hands by 3:15 pm US time, about evenly spread between bearish puts and bullish calls, putting it on pace for one of the most active options markets debuts ever.