Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Investors dump Robinhood in stock market debut

07/29/2021 | 06:28pm EDT

It was a less than auspicious market debut for the controversial trading app Robinhood.

In a rarity, the stock opened at its IPO price of $38 Thursday and then quickly headed south...dropping as much as 10 percent before cutting that decline roughly in half.

There are concerns about the company's business model and the $32 billion market value it received during one of the most highly-anticipated IPOs of the year.

Kathleen Smith of Renaissance Capital says that valuation doesn't necessarily stack up when you compare new-kid-on-the-block Robinhood to the venerable investing firm Charles Schwab.

"The company certainly does have value. The question is how it's valued relative to the existing circumstances. Schwab is trading at 5X trailing sales, and this offering is being put out at the $38 at 21X trailing sales. So, it's quite a premium to established brokers."

Revenue at Robinhood jumped fourfold in the March quarter thanks to the trading mania in so-called meme stocks.

Speaking at the IPO ceremony at the Nasdaq, Robinhood Markets CEO Vladimir Tenev was proud of what the company has accomplished.

"We didn't build Robinhood for the rich or those with decades of experience. We built it for everyone. We're humbled to be serving over 22 million people. And yet there's so much more to do."

But its popularity also came at a cost.

It's at the center of several regulatory probes.

And it's still facing negative backlash from a decision earlier this year to restrict trading in a few popular stocks, which enraged U.S. lawmakers and app users.

One way Robinhood sought to curry favor with its core audience was to set aside 20 to 35 percent of shares available in the IPO for actual users of the trading app.

That, however, didn't help out the stock's debut, which was down more than 8 percent by the closing bell.

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
NASDAQ COMP. 0.22% 14746.397621 Real-time Quote.16.73%
ROBINHOOD MARKETS, INC. 3.91% 42.29 Delayed Quote.0.00%
Latest news "Economy & Forex"
02:32aChina Evergrande unit will make onshore bond coupon payments on Sept 23
02:30aGerman auto giants place their bets on hydrogen cars
02:29aCHINA EVERGRANDE : Stocks find fleeting relief in Evergrande deal; Fed looms
02:27aCHINA EVERGRANDE : Stocks find fleeting relief in Evergrande deal; Fed looms
02:23aFacebook wraps up deals with Australian media firms, TV broadcaster SBS excluded
02:18aUK to pay tens of millions to get carbon dioxide pumping again
02:12aCHINA EVERGRANDE : JGBs trade flat ahead of FOMC, shrug off BOJ decision
02:08aBrent crude oil futures rise by $1 to $75.36 per barrel
02:08aBrent crude futures rises more than $1 to $75.39 per bbl
01:59aU.s. crude oil futures (not) rise by $1 to $71.49 per barrel
Latest news "Economy & Forex"