The no-fees investing platform Robinhood has officially made its debut in NASDAQ.
Prior to its IPO, Robinhood priced its shares at $38 each, valuing the company at around $32 billion. However, it looks like investor demand isn't as high as anticipated.
Robinhood IPO
California-based Robinhood filed the paperwork to go public with the U.S. Securities and Exchange Commission (SEC) earlier this month, Hypebeast reported. The app is now trading under the symbol "HOOD."
The company planned to sell 55 million shares while the app's co-founders Vlad Tenev and Baiju Bhatt sold $50 million worth of stock each. Robinhood reported revenue of $959 million last December 31, 2020, a 245 percent growth from 2019. The company recorded a net income of $7 million for that period.
However, over the last three months, Robinhood also reported a net loss of $1.4 billion. This was after the unprecedented market volatility and emergency funding required after it needed to restrict the trading of certain stocks, like GameStop, due to increased regulatory deposit requirements which transpired earlier this year.
The company's shares opened at $38 apiece on the @Nasdaq, matching the price the company had previously agreed to.
— Trove Finance (@trovefinance) July 29, 2021
NASDAQ đź“·#trovefinance #robinhood #ipo #stockexchange pic.twitter.com/c5CP999hxR
Robinhood Debut Stock Price
The trading opened at $38 per share as the company announced prior, the bottom target ranged marketed to buyers in its initial public offering, Financial Times said.
The company had set a range between $38 and $42 per share. But lackluster demand from investors brought the prices as low as 12 percent to $33.35 at midday in New York. The average US IPO usually experiences a 39 percent first-day jump in shares.
Popular tech initial public offerings usually price above expectations but Robinhood's value indicated that investor appetite, especially from larger financial managers that have the capacity to make or break an IPO, was not as hungry for the online brokerage's stock as they hoped for.
Robinhood's shares $HOOD fell more than 10% on their first day of trading, as many investors who used the app to participate in this year's "meme" stock trading frenzy snubbed its IPO. No trading curbs this time round 🤪
— Andrew Wandera (@AndrewWandera9) July 29, 2021
Bankers at Goldman Sachs led the IPO. After 30 minutes since it opened trading, 49 million HOOD shares worth $1.8 billion were traded. By 1 pm Eastern time, HOOD was among the most actively traded stocks in the US, making it surpass other established tech stocks like Apple and Tesla by the number of shares traded.
The $38 opening trade afforded Robinhood a valuation of $32 billion, establishing itself in the same sphere as larger brokers like ETrade which was bought by Morgan Stanley last year with an $11 billion equity valuation, Financial Times added.
Robinhood is the trading website that transformed the brokerage industry after establishing itself as the platform of choice for many first-time stock investors.
It offers commission-free trades that incentivized traders with rewards, bonuses, and push notifications. The company also operates game-like features on its app which regulators have criticized.
The median age of traders on the platform is 31, and the company's customers are often yonder and have smaller account balances as compared to those of more established online brokerages like Schwab, Fidelity, and ETrade.
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