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Online stock and crypto trading platform Robinhood made its Nasdaq debut on Thursday. Shares of the company started selling for $38, ensuing in a valuation of $32 billion. However, the price plummeted rapidly after 15 minutes of the launch, while recording a 9% decline. $HOOD managed to reclaim some of its loss through the day and closed the day at $34.82.
Robinhood Shares Dissapoint Investors on the First Day
The brokerage business that transformed asset trading for many investors is off to a dismal start on Nasdaq. Robinhood stock dropped more than 12% on its first day before it recovered 4% of its offer price.
The company’s public listing was a much-anticipated affair that made headlines for weeks. Traders and market experts put the initial public offering (IPO) between $38-$42. But the offer price selected by Robinhood was at the lower end of the discussed range. This placed Robinhood’s valuation at $32 billion — higher than its $12 billion funding last year, but lower than the expected $35 billion.
Some market watchers opined that the share’s disappointing launch isn’t a negative indication for its future. They recalled the tepid response Facebook’s IPO encountered on its arrival. The social media giant’s stock was also valued at $38 during its listing and suffered a 50% downturn over the next six months. Presently, Facebook is selling for $358.32, which is a resounding success for any brand.
Robinhood’s Challenging Journey to IPO
Co-founded by Vladimir Tenev and Baiju Bhatt in 2013, Robinhood’s ascent to prominence was challenged repeatedly due to many controversies. On the one hand, it gained traction for making stock and crypto trades accessible for retail investors. On the other hand, however, it faced scathing criticism from Wall Street for allowing meme stocks to trade without restrictions. Just two days back, the company received inquiries from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) about the infamous Gamestop episode.
Robinhood was also slapped with a hefty penalty of $70 million last month. The company was fined over misleading customers and systems outages that affected millions of users in 2020.