Robinhood Stumbles in Nasdaq Debut: IPO Priced at $38, Shares Close Lower

In one of the most anticipated Fintech initial public offerings (IPOs) of the year, Robinhood debuted on the Nasdaq today under the ticker “HOOD” in an offering priced at $38 a share. The share price came in at the low-end of the anticipated range. During the day, Robinhood traded as high as $40.22/share in the early minutes of trading but trended lower the rest of the day closing at just under $35/share. Robinhood raised around $2 billion with some existing shareholders cashing in a small portion of their equity.

In a blog post, Robinhood founders said “the new Wall Street lives on Main Street, and it’s a place for everyone — not just men in suits or big financial institution. Robinhood has long touted a mission of making investing accessible to the masses and the message has worked. Millions of accounts, now over 18 million, have signed up to trade securities, as well as crypto. Most of their users are trading securities for the first time.

Bhatt and Tenev said:

“As we begin this next chapter, we’ll keep living our values and working to make Robinhood the most trusted and most culturally-relevant money app worldwide. A place where you can build financial independence and have the tools and ability to own your financial well-being. We’ve only begun to scratch the surface of what’s possible, and have much further to go to truly democratize finance for all.”

As part of the IPO, Robinhood allocated around 20% of its shares to Robinhood account holders – an amount that was said to be one of the largest retail allocations ever.

Robinhood’s path to a publicly traded firm has been rocky at times. The trading platform has had to pay penalties to both FINRA and the Securities and Exchange Commission in regards to certain practices like payment for order flow (trade routing). The state of Massachusetts has sought to revoke Robinhood’s broker-dealer license.

The rise of the meme stocks, driven by discussions on chat boards like Reddit, saw Robinhood rush to raise capital during a cash shortfall. The collateral damage included multiple hearings in Congress where Robinhood’s practices were questioned.

One of the items on the SEC’s agenda is “gamification” a feature some people claim Robinhood uses to drive frequent trading.

Challenges aside, Robinhood has a pretty ambitious objective. In an interview today on CNBC, Tenev said their goal is to be the most trusted and culturally relevant money app worldwide. Not just the US.

 

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