Wed. Oct 27th, 2021

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© Reuters. FILE PHOTO: The Robinhood logo is seen on a smartphone in front of a stock chart shown in this illustration from July 2, 2021. REUTERS / Dado Ruvic / Illustration / Photo d ‘file

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By Noor Zainab Hussain and Ankur Banerjee

(Reuters) – Shares of Robinhood Markets Inc. (NASDAQ 🙂 fell more than 10% after opening a flat on its Nasdaq debut Thursday, valuing the online broker at about $ 28 billion, a sad reception to one of the most anticipated lists of the year.

Shares fell to $ 34 in the first trading, well below the $ 38 bid price, which was at the lower end of the initial bid price range (IPO).

The company, arguably the start of its next-generation financing technology, was listed on Wednesday and grossed $ 2.1 billion.

His long-awaited debut comes months after he found himself in a confrontation between a new generation of retail investors and Wall Street hedge funds.

Its decision earlier this year to restrict trade in some popular stocks after a tenth increase in deposit requirements at its clearing house had infuriated U.S. lawmakers and users of its app, a ideal destination for retail investors.

Its easy-to-use interface made it a hit among young investors trading from home during coronavirus-induced restrictions and its popularity has increased over the past 18 months.

Jeff Zell, senior research analyst at IPO Boutique, said there were more skeptics than believers regarding this company at this level of valuation.

“That said, there is a negative effect on this performance or low performance as it sets‘ expectations ’at the lower end of the scale for Robinhood when reporting its first quarters,” Zell said.

“But overall, the company still has a lot to prove.”

Robinhood’s revenue in the March quarter quadrupled, thanks to the mania for trading in so-called meme stocks. But it also had a cost, placing it at the center of several regulatory investigations.

The company was forced to raise $ 3.4 billion in emergency funds after its finances were cut due to the massive jump in retail trade.

The company was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. The two will have the majority of voting power, with Bhatt holding around 39% of the outstanding shares and Tenev around 26.2%.

It planned to reserve 20% and 35% of its offer for users of its trading platform that allows users to conduct unlimited transactions without commissions on shares, exchange traded funds, options and cryptocurrencies.

Robinhood chief financial officer Jason Warnick told Reuters he hopes the IPO can demonstrate the benefits of allocating a large number of shares to retail investors.

the company revealed on Tuesday that it has received inquiries from American watchdogs to ask if employees are bargaining GameStop Corp. (NYSE 🙂 and AMC Entertainment (NYSE 🙂 before the online broker publicly announced it was restricting trading on these and other meme stocks on Jan. 28.

The company is also being investigated over whether it complied with staff registration rules, he said.

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