Robinhood Markets, the zero-fee stock trading platform, has shuffled in and out of public favor in the last year: first as a weapon of revolution for an army of retail investors waging war on Wall Street, and then as a banner of doomed causes that marched the army straight into their graves.
Despite its speckled history, it promises to be one of the biggest and most hyped market debuts of the year, set to kick off trading in a matter of hours. Here’s what to know:
Robinhood will debut on the Nasdaq under the ticker HOOD. Shares are priced at $38, the bottom end of its $38 to $42 range, Financial Times reports, and the company is aiming for a valuation of about $32 billion. It’s going public through a traditional initial public offering (IPO) route, as opposed to the direct listings and special purpose acquisition company (SPAC) deals that have been in vogue lately.
In keeping with its stated mission of democratizing the stock market by lowering the barriers to trading, Robinhood is reserving 20% to 35% of its shares for its own customer base, which CEO Vlad Tenev has said would be among the largest retail investor allocations ever. Historically, IPO shares have been primarily reserved for Wall Street institutions and high-net-worth individuals, who can then buy into the stock before its debut, thus capitalizing on any resulting IPO pop.
It’s a highly unusual move, but nevertheless in character for the company. However, some are skeptical of the strategy: “There’s no doubt that retail traders are much more fickle. The more [Robinhood] sells to retail, the more susceptible they will be to some sort of Reddit super squeeze type of activity,” Greg Martin, a director at investment broker Rainmaker Securities, told CNBC recently. In fact, Robinhood itself warned in its IPO registration that its stock price could become a rollercoaster ride.
What else are people saying?
According to a report from The Wall Street Journal, despite the unprecedented access, many individual investors are still passing on Robinhood stock. Chatter on social media platforms like Reddit, Twitter, and Discord suggests that some of the stock’s avoidance might be motivated by revenge, for when the company blocked investors from buying meme stocks like GameStop and AMC amid a frenzied rally earlier this year.
Others say they’ve developed an allergy to the stock after several high-profile controversies, including scrutiny from the Financial Industry Regulatory Authority (FINRA) that led to a $70 million fine for alleged regulatory failings, the costliest penalty ever imposed by the group.
However, another crowd is optimistic, citing Robinhood’s potential to carve out space in the nascent cryptocurrency trading universe.
So could the maker of meme stocks become a meme stock itself?
TBD. Stay tuned!