Thursday July 29, 2021
Share loses significantly
Robinhood’s stock market debut fails
The discount broker Robinhood from Menlo Park, California, starts with a rather poor overall rating on the Nasdaq tech stock exchange. Then the share also loses significantly. One reason could be the legal issues that make the securities risky.
Investors gave securities broker Robinhood the cold shoulder when it went public in New York. Shares fell more than ten percent to $ 34 when it debuted on the Nasdaq tech stock exchange. Robinhood had previously found it difficult to get hold of the papers as hoped for investors.
Ultimately, the shares had gone on sale at an issue price of $ 38; Robinhood had actually targeted up to $ 42. At the premiere, however, the company also opted for an unusual method. Overall, Robinhood started with an overall valuation of almost 32 billion dollars on the Nasdaq, which was rather poor in view of the high expectations. The discount broker, who had previously hit the headlines during the turmoil over hot stocks of US companies like Gamestop, had actually aimed for a valuation of around 35 billion dollars.
Robinhood has seen rapid growth recently, but is controversial because of its business model and has some legal issues that make the stocks risky. The company from Menlo Park, California, founded in 2013, pioneered the younger generation of investors in the US financial market with its easy-to-use app for trading stocks, options and cryptocurrencies. Robinhood has many critics, however.
Allegation of the gambling provider
The broker does not take any fees from users, but earns money by brokering their transactions. That is why Robinhood is confronted with accusations of encouraging customers such as a gambling provider to trade as much as possible and also risky. The company defends its business model by “democratizing” the financial market.
When it went public, Robinhood reserved up to 35 percent of its shares for its own users in an unusual action. In doing so, the fintech company took a risk – the debut was more unpredictable than normal IPOs, in which investment banks try to ensure a regular process and stable prices.
Robinhood put its papers on the Nasdaq under the ticker symbol “HOOD”. According to Bloomberg, it was the seventh largest US IPO this year. The company more than doubled its number of users in the past year. In the second quarter it was 22.5 million.
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