Shares of Robinhood Markets Inc. closed more than 8 percent on its market debut at $34.82 per share. The reason for this is reported to be that Robinhood’s IPO was neglected by a good number of investors who used its platform to participate in stock trading.
According to financial markets platform Deologic, out of the 99 companies listed in the US, only 16 are worth at least $10 billion when they debuted.
Robinhood rose to prominence with its friendly interface that drew a lot of investors especially those who were stuck at home as a result of the pandemic. These young investors were fixated on cryptocurrency which owned that moment.
According to reports investors were not keen on investing in Robinhood for the following reasons; the risk of regulatory crackdowns, its shaky valuation coupled with the growing anger from investors regarding the company’s imposition of trading curbs when the meme stock trading frenzy flared in January.
Glen Anderson; President of secondary trading platform for private pre-IPO shares – Rainmaker Securities said that his company traded about $200 million in Robinhood stocks in the private market last year. “A year ago we were trading the stock at 15 bucks a share. And our most recent trades in early June were $55 a share (in the private market)”.
In what is being described as an unusual move, Robinhood declared its intention to reserve between 20 and 35 percent of shares for its users.
Robinhood Market Inc. was founded in 2013 by Vladimir Tenev and Baiju Bhatt. The idea was to “provide everyone with access to the financial markets, not just the wealthy”. Commenting on the company’s market debut and how it has been operating these past months, Kathleen Smith of Renaissance Capital said that “it maybe seemed like a good idea to offer (the IPO) to your customers, but it might not be very helpful when it comes to controlling how the shares are allocated and the beginning of the trading of this IPO”.
Robinhood shares were priced at $38 in the IPO but closed at $34.82 per share.