Were investors surprised by Robinhood’s debut on the public markets? (All credit goes to Real money Helene Meisler for the pun).
Maybe not, since companies like Uber, did not have IPO stellar days either.
But, as I wrote in Real money there are other concerns surrounding the company.
So, let’s take a close look at Robinhood’s commercial debut and the scrutiny the company faces.
I bring this from yesterday.
The company said it received inquiries from the Financial Industry Regulatory Authority and the Securities and Exchange Commission.
The company faces an investigation related to employee trade with so-called momentum stocks before enacting a trade restriction in January.
“These matters include inquiries related to whether any employee trading in these securities may have occurred prior to the public announcement of the early 2021 trade restrictions on January 28, 2021,” the company stated in its presentation.
Now in the trade
Robinhood opened at $ 38, but ended at $ 34.82.
The stock had a slump early on, managing to peak at $ 40 a share before dropping below the opening price and clinging to the $ 34 mark in the afternoon.
So why did Robinhood go public when they were still facing polls and had just grappled with a negative news cycle during the spring following trade restrictions on certain stocks that were placed in January?
“I think this is the last resort” for Robinhood to go public, “said Hugh Tallents, senior partner at consultancy cg42. He pointed out the pros at the moment such as the new user account, retail investment money flowing into the public market and through Robinhood, and a bullish IPO market. “I think they have some tailwinds, but I also think the headwinds will only get stronger as the year progresses.”
However, Julie Chariell, senior fintech analyst at Bloomberg IIntelligence, noted, before the IPO, that “you have … up to 35% of the shares can be allocated to retail and so what does that mean for pricing in aftermarket capabilities, appraisal, volatility, etc.
But, whatever the reason, Robinhood is now officially a public company.
Let’s dive into the speculation, shall we?
Will this be a story of Robinhood and the Merry Men or of Hoodwinked? That is the question everyone is trying to answer.
To Real money, I researched possible Robinhood catalysts. Could crypto take off? What if there is more regulation? How about the payment for the order flow? Is that a practice that will be repressed?
And looking at both regulation and probes facing Robinhood, one thing became clear from Georgetown adjunct professor James Angel, who not only specializes in regulating the market on a global scale, but was also interested in buying. (HOOD) – Get report following your debt.
Ángel said: “The thing about our laws of values is that they are so precise. And so vague at the same time.”