Robinhood Loses More Ground in Trading Debut After Muted IPO

Robinhood Loses More Ground in Trading Debut After Muted IPO
Crystal Tse, Katie Roof and Annie Massa
·3 min read

(Bloomberg) -- Robinhood Markets Inc., the online trading platform focused on making investors out of millennials, slid as much as 12% in its trading debut before climbing back closer to its price in its initial public offering.

The trading app made famous in this year’s meme stock frenzy priced its $2.1 billion IPO at the bottom of a marketed range. The shares opened at that price Thursday and quickly slid from there, before regaining some of those losses.

The shares were down 1.2% to $37.54 at 1:28 p.m. in New York trading, giving the company a market value of about $31 billion. Accounting for employee stock options and similar holdings, Robinhood’s fully diluted value is more than $32 billion, but still short of the more than $36 billion valuation it would have had at the top end of its price range.

The company sold 55 million shares Wednesday for $38 each after marketing them for $38 to $42.

The failure to deliver a first-day pop craved by IPO investors may signal doubt about Robinhood’s promise to “democratize” and expand access to capital markets.

Robinhood debuted in a crowded but diminished week in the capital markets, as a record-setting year of U.S. listings is losing momentum. Some 33 companies including blank-check firms had been slated to raise more than $11.6 billion on U.S. exchanges, according to data compiled by Bloomberg.

The second-biggest IPO of the bunch, what was planned to be a listing of up to $1.8 billion by car-battery maker Clarios International Inc., was postponed indefinitely. An IPO by fruit and vegetable producer and distributor Dole Plc, earlier planned for Tuesday, was cut back to a target of up to $515 million and moved to later Thursday.

Five of of the six U.S. IPOs that raised $2 billion or more closed above their offer prices on the first trading day, Bloomberg’s data shows. Only three are trading above their offer price currently. Robinhood’s IPO was bigger than all but one of that group.

Robinhood allocated an unusually large portion of its IPO shares to retail stock buyers. It ended up selling around 20% to 25% of the deal to such individual investors, after earlier saying it could set aside as much as 35% of the offering for them, according to a person with knowledge of the matter.

This method also comes with risk as retail investors are often associated with volatility. Another potential wrinkle is that Robinhood is allowing insiders to sell up to 15% of their holdings right away, instead of locking them up for the first six months.

Robinhood co-founder and Chief Executive Officer Vlad Tenev said in a Bloomberg television interview that he’s striving for a “large portion” of the company’s customers to be long-term investors.

“It’s a surreal moment,” Tenev, 34, said shortly before Robinhood shares began trading on Nasdaq. “We’re not thinking about anything that happens in the market, especially in the short term.”

Goldman Sachs Group Inc. and JPMorgan Chase & Co. advised Robinhood on its listing. Its shares are trading on the Nasdaq Stock Market under the symbol HOOD.

(Updates with valuation in third paragraph)

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting

Recommended Stories

  • Robinhood Flirts With Worst Debut Ever for IPO of Its Size

    (Bloomberg) -- Robinhood Markets Inc. wanted to make history with its initial public offering, and now it might -- for the wrong reason.Shares in the broker behind the meme-stock revolution fell as much as 12% below the IPO price in the company’s first trading session. That puts the stock in the running to rank as the worst debut on record among U.S. firms that raised as much cash as Robinhood or more, according to data compiled by Bloomberg.Shares rebounded and were last trading 1% lower at $37

  • Robinhood Debuts Much Anticipated IPO — But Experts Warn To Take Caution

    Robinhood is starting its NASDAQ listing today under the ticker HOOD, in one of the most anticipated and unusual IPOs of the year. Explore: Robinhood, Dole and Four Other Companies With Summer IPOs...

  • Robinhood Stock Falls In Debut After IPO Prices At Low End Of Range

    Robinhood stock slipped on its first day after a head-spinning year of highs and lows for the startup that disrupted how millions of Americans invest.

  • Robinhood’s Tenev Steps Into ‘Surreal Moment’ on Day of IPO

    (Bloomberg) -- On the day of Robinhood Markets Inc.’s tepid public debut, Chief Executive Officer Vlad Tenev is focusing on the long term, saying he hopes his firm’s app can cultivate users who will do the same.The brokerage he co-founded is striving for a “large portion” of its customers to be long-term investors, Tenev said Thursday in an interview with Bloomberg Television.“It’s a surreal moment,” Tenev, 34, said shortly before Robinhood shares began trading on Nasdaq. “We’re not thinking abo

  • Three arguments for, and three against, buying Robinhood shares once they start trading after the IPO

    Half of brokerage accounts opened in the U.S. from 2016 to 2021 have been set up on Robinhood. Michael Brush discusses the pros and cons of owning the company's stock.

  • World’s Biggest Copper Mine Moves a Step Closer to Strike

    (Bloomberg) -- Union leaders at Escondida are calling on workers to reject owner BHP Group’s final wage offer, raising the possibility of a strike at the world’s largest copper mine at a time of tight global supplies and high prices.An offer delivered at the end of regular wage talks in Chile falls short of worker demands, with the company pushing for longer hours in a bid to boost productivity and profit, the union said in a statement Wednesday. The 2,330 members will vote on the offer through

  • Robinhood IPO: We are a tech company first, CFO says

    Robinhood CFO Jason Warnick joins Yahoo Finance Live to discuss the company’s public debut.

  • Robinhood slides over 10% in grim Nasdaq debut

    Shares of Robinhood Markets Inc fell more than 10% after opening flat in their Nasdaq debut on Thursday, valuing the online brokerage at about $28 billion, a dismal reception to one of the most hotly anticipated listings of the year. Its long-awaited debut comes months after it was caught in a confrontation between a new generation of retail investors and Wall Street hedge funds. Its decision earlier this year to restrict trading in a few popular stocks following a tenfold rise in deposit requirements at its clearinghouse had enraged the U.S. lawmakers as well as users of its app, a go-to destination for retail investors.

  • Didi’s Shares Surge on Report It’s Considering Going Private

    (Bloomberg) -- Didi Global Inc. surged after the Wall Street Journal reported the firm is considering going private to placate Chinese regulators and compensate investors for losses.The Beijing-based company has been in discussions with bankers, regulators and key investors about ways to resolve regulatory woes since its troubled listing, the newspaper said, citing people with knowledge of the matter. One of the options could involve a tender offer for the publicly traded shares, according to th

  • Robinhood's unique IPO is a clever defense against competitors

    Robinhood's IPO has some unique — but not unheard of — characteristics. And they could have an impact on the company's business down the road when it comes to defending its territory to competitors.

  • Nikola EV Startup's Former Chairman Charged with Defrauding Investors

    Trevor Milton, who resigned from Nikola last year amid fraud allegations, has been hit with three counts over misleading statements to investors.

  • Robinhood tumbles as much as 11% in trading debut

    Steve Sosnick, Interactive Brokers Chief Strategist joins the Yahoo Finance Live panel with the latest on IPO’s as Robinhood gets ready to make it debut on the Nasdaq.

  • Canada Pension Names Kim to Run $100 Billion Private Equity Unit

    (Bloomberg) -- Canada Pension Plan Investment Board picked an internal candidate as its new private equity head, naming Suyi Kim, the pension fund’s top executive in Asia, to run the $100 billion division.Kim will lead a department that’s an active player in buyouts globally, both in direct investments and through funds run by Apollo Global Management Inc., KKR & Co. Inc. and other private equity firms. CPPIB’s private equity assets have grown more than fivefold in the past decade.The appointmen

  • Dow, S&P 500 hit records as investors shake off GDP data, Robinhood makes trading debut

    U.S. stocks shrug off a weaker-than-expected reading on second-quarter gross domestic product and other economic data, while Robinhood Markets makes its trading debut.

  • Homebase raises $71M for a team management platform aimed at SMBs and their hourly workers

    Small and medium enterprises have become a big opportunity in the world of B2B technology in the last several years, and today a startup that's building tools aimed at helping them manage their teams of workers is announcing some funding that underscores the state of that market. Homebase, which provides a platform that helps SMBs manage various services related to their hourly workforces, has closed $71 million in funding, a Series C that values the company between $500 million and $600 million, according to sources close to the startup. GGV Capital is leading the round, with past backers Bain Capital Ventures, Baseline Ventures, Bedrock, Cowboy Ventures and Khosla Ventures also participating.

  • Robinhood Duo Ride Trading Frenzy to Billionaire Riches

    (Bloomberg) -- Vlad Tenev and Baiju Bhatt, the Robinhood Markets Inc. co-founders who drew a generation of young people into investing on their phones, are officially billionaires.Robinhood sold shares to investors late Wednesday for $38 apiece, which put the net worth of Tenev, the company’s chief executive officer, at $2.4 billion, according to the Bloomberg Billionaires Index. Bhatt, who shared the CEO duties until last year, is worth $2.8 billion.The stock fell as much as 12% at the outset o

  • Make a Shopping List for Stocks

    Identifying candidates to buy before a market sell-off can help you execute a buy-the-dip plan.

  • China EV Stocks Continue Rebound As Beijing Changes Tone

    China EV stocks Nio, Xpeng and Li Auto rebounded again as Beijing took further steps to soothe investors reeling from the recent market rout.

  • United Airlines to outsource catering operations from October

    United said it has selected three suppliers to operate the airline's five kitchens and oversee menu design and administration. "We wanted to proceed in a way that allowed us to protect the vast majority of jobs for our United catering team members, and invest in solutions that significantly improve our customers' onboard experience," United's VP of customer innovation and strategy and catering, Mandeep Grewal, told staff. United expects to initiate the transition in October - when federal payroll aid that prohibited airline job cuts expires - and be working with its new partners by mid-November.

  • Tycoon’s $6 Billion Surge Unseats Samsung Heir as Richest Korean

    (Bloomberg) -- Brian Kim, the founder of South Korean messaging giant Kakao Corp., has seen his fortune jump by more than $6 billion this year, propelling him to the top of the country’s wealth ranking.Kim is now worth $13.4 billion, according to the Bloomberg Billionaires Index, after Kakao shares rose 91% in 2021 alone. South Korea’s second-richest person, Samsung heir Jay Y. Lee, has a net worth of $12.1 billion.It’s an example of how self-made technology entrepreneurs are climbing the rich l