Robinhood shares slide more than 10% in early trading

Karthik Subramanian

Robinhood, the stock trading super-app that is loved by the Gen-Z, share prices fell by over 10% in early trading as the decks are prepared for its formal trading launch.

The shares were trading below $34 as of last trading reports, down from $38 which was the offer price. Even this offer price was at the lower band of what was expected. This values the firm at around $28 billion at this time, though it was expected to be valued at over $40 billion at launch. Of course, this is much better than what it was valued at during its Series G but this is indeed a disappointing and cold start to what was expected to be a bumper opening for the stock launch.

About a third of the stocks were reserved for retail traders on its own platform which means that they are going to have a nervous time deciding whether they want to hold on to the stock or whether they would r6ather sell it and buy back later, if and when the price falls more. All in all, a tough decision to make. Many factors are being attributed to this damp reception of the launch.

One of the primary reasons is the fact that the company is yet to show consistent profitability. It has been losing money for most of the time that it has been in existence though it has shown some strong revenue towards the end of last year and a part of this year as well helped in no mean measure by the increase in crypto and meme stock trading during this period. But close observers would note that this surge is likely to be temporary as the revenues from these avenues would vanish once the prices fall which means that such revenues have their ebbs and flows.

The company is yet to come up with a consistent method to boost its revenues and hence has a lot to prove. It has also been mired in controversy over its practice of halting or regulating trades made on meme stocks like GameStop due to erosion of its own liquidity then. It was also fined around $70 million for its violations by FINRA and was also forced to raise $3.4 billion as an emergency measure when it came under pressure from the GameStop trading issues. These show that its foundations are still not very strong and could be put at risk by a stock run by a set of retail or large traders and this could be putting of institutional investors from investing into it heavily as yet.

Read this next

Digital Assets

Ripple and Lithuanian FINCI partner for XRP-based payments

Ripple is looking to expand its presence in Europe, forming a new partnership with Lithuanian electronic money institution FINCI.

Digital Assets enables Shopify merchants to accept crypto payments has integrated with Canadian e-commerce giant Shopify so global merchants can accept crypto payments and save on processing fees through cash-final settlements.

Institutional FX

FX volume drops 13pct at CLS Group in April 2022

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms were notably down in April.

Crypto Insider, Opinion

Regulation: The Gold-Standard for Crypto-Assets

When the US supervisory authority SEC allowed an investment product referencing Bitcoin futures to be traded for the first time last October, this was widely perceived as a signal that cryptocurrencies had finally become established as an asset class.

Executive Moves

Solid hires FX industry veteran Darren Barker for multi-bank ECN’s business development

His curriculum vitae includes former roles at Cantor Fitzgerald, Sucden Financial, R.J. O’Brien, Jefferies, Natixis, Unicredit, J.P. Morgan, Raiffeisen, RBS International, UBS, Deutsche Bank, and Citi. 

Inside View

Mihails Safro, xpate CEO: Tips sellers need to know to overcome compliance obstacles

The unprecedented growth of e-commerce changed shopping dramatically last year. Many sellers suddenly faced a rapidly growing number of customers who had to stay home during the lockdown. When some clients adopted Netflix and Spotify as part of a daily routine, others ventured into online business. Robinhood alone saw a whopping 6 million rise in user numbers in 2 months. 

Institutional FX

BMLL delivers Level 3 data to Kepler Cheuvreux for order book analytics and algo performance

The solution covers more than 6.5 years of harmonised historical data from 65 venues and combines it with easy to use APIs and analytics libraries in a secure cloud environment. 

Digital Assets

Crypto Is An Invaluable Tool In The Fight Against Financial Oppression  

Crypto has proven itself to be much more than just a hot investment. Indeed, some say it’s poised to play a critical role in the future of finance

Executive Moves

Parameta appoints Head of Benchmark and Indices with a focus on ESG and rates

The firm said building out its benchmarks & indices offering will now be a core priority, with a particular focus on the ESG and rates space.