Robinhood trading app disappoints on stock market debut
Robinhood CEO Vlad Tenev on the Nasdaq IPO. (Screenshot: Youtube / Robinhood, t3n)
Instead of a clear plus, the share of the trading app Robinhood posted a minus of up to ten percent on its stock market debut. A high volatility risk is expected on the stock market.
With a valuation of 35 billion US dollars, Robinhood wanted to succeed on the Nasdaq tech stock exchange. The stock exchange traders weren’t quite as enthusiastic as they had hoped. In the run-up, a price range between 38 and 42 dollars was targeted, in the end it went to the trading floor with 38 dollars. That started Robinhood with an overall valuation of $ 32 billion. For comparison: In the fall of 2020, the last round of financing, it was $ 11.7 billion.
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Robinhood stock under pressure on first day of trading
In the course of the first trading day, the share went downhill by ten percent to below $ 34. Shortly before the market closes on Thursday afternoon, New York time, the paper is just below the $ 35 mark. This is surprising in that in the past few months stocks have mostly risen sharply on their first day of trading, like that Handelsblatt writes. So what happened?
One possible explanation for the disappointing stock market launch is the expected high volatility of the new stock – something that investors don’t like. Robinhood has issued a comparatively high proportion of its shares to small investors. It is possible that they want to cash in quickly. Another damper could be due to a new investigation by the financial regulator Finra, which Robinhood only announced on Tuesday.
Analyst: Robinhood “hottest iron on the stock market”
At the end of June, Robinhood had paid Finra $ 70 million in a settlement – the highest payment in the agency’s history. Various other investigations into possible violations are also pending. So it’s no wonder that analyst Konstantin Oldenburger from the online broker CMC Markets described Robinhood as “probably one of the hottest irons on the stock market”, “on which investors could burn their fingers”.
Robinhood is allowed to Despite possible disappointment, we are pleased about the 2.1 billion dollars that the trading app’s IPO brought into the coffers. Among other things, this is intended to finance the planned international expansion. In addition, Robinhood CEO Vlad Tenev told CNBC, the company wants to make itself less dependent on trade revenues in the future. Rather, Robinhood should become an app that revolves around all aspects of money, not just investing.
