San Francisco — Robin Hood helped Promote the “memestock” frenzy Earlier this year, he rode a roller coaster to send the stock prices of small businesses. On Thursday, its own initial public offering was much more curtailed.
Equity trading startup stocks began trading at the same price as their offer, at $ 38, but then fell 11%. The company’s value was $ 31.7 billion, and the company’s asking price, which was the lower end of the proposed range, indicates that investors may hesitate to support the company’s grand mission to defeat Wall Street. I am.
Robin Hood’s free stock trading service helps investors create conditions for violent trading fluctuations in meme stocks by hype about trading on social media. As Robin Hood, few companies have a profile and level of controversy such as suspension, fines, parliamentary hearings, protests, memes, etc., but their offer is the largest of the enthusiastic years of their public market debut. It’s one of the things.
However, its trading debut showed that investors’ euphoria for IPOs may be limited, even during the years of big hits for IPOs. According to Renaissance Capital, which tracks IPOs, there were 213 IPOs in the first half of this year, more than any other year in the last decade. The busiest in 20 years. Grocery delivery company Instacart and social network Next Door will be available later this year.
NS Unpredictability of initial transaction It was exacerbated by anomalous movements by Robin Hood, who has a mission to democratize finance. The company has decided to sell one-third of its products to retailers through its app. Most other publicly traded companies do not do this or offer small amounts of stock to retail investors.
But in the end, according to those with knowledge of offerings, only about 20% of offerings are sold to retail customers, indicating less interest than expected.
Vladimir TenevIn an interview, Robin Hood’s CEO and co-founder said the IPO was “a celebration of individual investors in the United States.” “We keep in mind that this is an important moment for our customers,” he added.
Robin Hood’s slimy public debut casts doubt on Silicon Valley companies after a rocky year.
In the early days of the pandemic, Robin Hood suffered a power outage at a critical moment when the stock market plunged.As the years go by and the app becomes more popular, commentators Trader level of risk I took it especially in highly leveraged options trading.
Other aspects of Robin Hood’s app, such as confetti explosions and lottery scratch-offs, show a comparison with gambling. One of the young customers, Alex Kearns, Suicide last year After misunderstanding about borrowing in his account. Since then, Robin Hood has settled with his family.
In January Stock traders united on social media Raise the stock price of meme stocks such as game retailer GameStop and movie theater chain AMC Entertainment.
Robin Hood had to stop some trading and raise multiple rounds Emergency funds To cover the collateral required for a customer’s transaction. Mr. Tenev’s cell phone was confiscated by authorities as part of a situation investigation. Robin Hood was sued more than 50 times and Mr Tenev was summoned to testify in Congress.
In July Robin Hood paid a $ 70 million fine To financial industry regulators for misleading customers and harming them with power outages.
The controversy did not seem to undermine Robin Hood’s growth. Last year, the company added 5 million customers, bringing the total to 18 million. Revenues more than quadrupled to $ 420 million in the first three months of the year, compared to $ 96 million in the previous year. It also posted a loss of $ 1.4 billion due to emergency debt resulting from the January enthusiastic GameStop transaction.
“Robin Hood is a growth stock and may continue to grow, but the market is not at risk for this growth,” said Josh White, a professor of finance at Vanderbilt University, after Robin Hood’s stock began trading. I’m not saying that. ” “Maybe it’s not a $ 32 billion stock.”
Tenev, 34, and Baijubat, 36, founded Robin Hood in 2013 with the goal of destroying Wall Street’s persistent interests. They aimed to make equity investment fast and free through mobile apps. Robin Hood sold customer orders to Wall Street companies for a small fee per transaction, rather than charging a per-transaction fee like a traditional brokerage firm. Ultimately, many of Robin Hood’s traditional competitors have reduced transaction fees to zero.
The company has also expanded into other areas.It allows people to trade cryptocurrencies including: Joke currency dogecoin, Accounted for one-third of the revenue from crypto trading in the first quarter. It expanded to checks and savings accounts, but its launch was embarrassing after claiming that the product was endorsed by a consumer protection group that did not guarantee such offerings.
Recently, Robin Hood has expanded to IPO services, including its own IPO services. He also said he would soon open a retirement savings account.
In the process, Robin Hood has raised over $ 2 billion in venture funding. Its largest investors include New Enterprise Associates and Index Ventures.
Robin Hood said in its prospectus that after the IPO, Mr. Tenev and Mr. Bat would each own about 8% of Robin Hood’s stake and each would invest about $ 2 billion in the company. They own a special type of voting stock that allows them to control 65% of their voting rights to the company.
Robin Hood used an IPO to increase its position as a financial democratic force. “Finance is now as culturally relevant as music and art,” the founders said in a rebellious letter, suffering from news coverage that “blamed” the next generation of investors. Said.
However, in preparation for Robin Hood’s listing, some traders have said they are already planning to unite to dump their shares in retaliation for the January suspension.
The boiling frustration did not discourage Mr. Tenev and Mr. Bat on Thursday. Tenev said he plans to ignore short-term volatility and focus on Robin Hood’s customers and products.
“We have no control over what happens in the market,” he said. “It’s a moment of time.”
Lauren Hirsch Contribution report.
Robinhood IPO: Stocks Fall After Opening at $ 38
Source link Robinhood IPO: Stocks Fall After Opening at $ 38