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Robinhood closes at $34.82 in grim stock market debut

Stock MarketsJul 29, 2021 09:18PM ET
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3/3 © Reuters. FILE PHOTO: Robinhood logo is seen on a smartphone in front of a displayed stock graph in this illustration taken, July 2, 2021. REUTERS/Dado Ruvic/Illustration/File Photo 2/3

By Echo Wang and Noor Zainab Hussain

(Reuters) -Robinhood Markets Inc's shares closed more than 8% lower at $34.82 per share on their first day of trading, as many investors who used the popular trading app to participate in this year's "meme" stock trading frenzy snubbed its initial public offering (IPO)

Only 16 of the 99 U.S.-listed companies that were worth at least $10 billion when they went public declined on their first day, according to Dealogic, whose data goes back to 1995.

“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),” said Glen Anderson, president of Rainmaker Securities, a secondary trading platform for private pre-IPO shares. Anderson said they traded about $200 million in Robinhood (NASDAQ:HOOD) stocks in the private market last year.

Robinhood's easy-to-use interface has made it a hit among young investors trading from home on cryptocurrencies and stocks such as GameStop Corp (NYSE:GME) during the COVID-19 pandemic. Some IPO investors stayed on the sidelines, citing concerns over its frothy valuation, the risk of regulators cracking down on Robinhood's business, and lingering anger with the company's imposition of trading curbs when the meme stock trading frenzy flared in January. In an unusual move, Robinhood had said it would reserve between 20% and 35% of its shares for its users. Many IPOs benefit from excluding retail investors, who end up fueling a first-day trading pop by snapping up shares in the open market. By letting many retail investors under the IPO tent, Robinhood made big gains less likely for investors on the first day."The market believes that institutional investors will hold on for a longer time, and retail investors are more likely to flip," said Reena Aggarwal, professor of finance at Georgetown University. Robinhood shares priced at $38 in the IPO. Stanford University roommates Vlad Tenev and Baiju Bhatt founded the company in 2013. The two will hold a majority of the voting power, with Bhatt keeping around 39% of the outstanding stock and Tenev about 26.2%. "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," said Kathleen Smith at Renaissance Capital in Greenwich, Connecticut. Robinhood enraged some investors and U.S. lawmakers this year when it restricted trading in some popular stocks following a 10-fold rise in deposit requirements at its clearinghouse. It has been at the center of many regulatory probes. The company disclosed this week that it has received inquiries from U.S. regulators looking into whether its employees traded shares of GameStop and AMC Entertainment (NYSE:AMC) Holdings, Inc before the trading curbs were placed at the end of January.

Robinhood closes at $34.82 in grim stock market debut
 

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Comments (7)
Kev MO
Kev MO Jul 30, 2021 8:00AM ET
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It goes down to $27 to $28 . Then buy it . Don’t dare to a short position .
Kev MO
Kev MO Jul 30, 2021 7:07AM ET
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It goes down to $25 to $27 then buy it .
Gershom Zvi
Gershom Zvi Jul 30, 2021 12:42AM ET
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To the Moon $250 for sure !!!
Antony Dupont Morissette
Antony Dupont Morissette Jul 29, 2021 1:13PM ET
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Do not short it, its a trap !
Bill Cool
Bill Cool Jul 29, 2021 1:08PM ET
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Not wise to buy today. Crypto would have been better despite the dangers. New investors are sometimes lucky, but most of the time they will lose $$$.
Chris Garcia
Chris Garcia Jul 29, 2021 12:59PM ET
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This criminal brokerage will be bankrupt sooner rather than later
John Sheehy
John Sheehy Jul 29, 2021 12:14PM ET
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Avoid like the plague, does anyone trust them?
Kev MO
Kev MO Jul 29, 2021 12:14PM ET
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My friend , You trust it or not but they had created lots of new million baby’s. It’s True.
 
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