By Dhirendra Tripathi
Investing.com – Robinhood stock (NASDAQ:HOOD) traded nearly 5% higher in Wednesday’s premarket, benefiting from the removal of a a near-term overhang on the stock coming from early backers who wanted to cash out.
The online trading platform said Tuesday it is seeking a termination of the resale of its shares by certain investors including affiliates of venture capital firms Andreessen Horowitz and Ribbit.
As part of its initial public offering, the company was under a contractual obligation to let those early shareholders dispose of some of their stake. With that obligation having now expired, it has sought to terminate the relevant part of the contract.
The shares accrued to their holders upon automatic conversion of some of the company’s debt in connection with the IPO. The company went public on July 29 with each share issued at $38.
According to an August 5 filing with the SEC, Robinhood registered the sale of around 98 million shares - over 10% of the group's overall capital - by early shareholders. Robinhood wouldn't have received any of the proceeds.
The termination will take effect as soon as the SEC declares the amendment effective, Robinhood said in a statement.