Robinhood has long been a favorite trading app among younger investors, who prefer not having to pay fees when they invest. Although there are some disadvantages to this model, as was seen earlier this year regarding some other heavily-shorted meme stocks, it seems investors still are using Robinhood more than ever. Since going public last week, Robinhood Markets (NASDAQ: HOOD) has surged in value. Shares skyrocketed even more on Wednesday as options trading on the stock finally kicked off.
While the company went public back last Thursday with less fanfare than initially expected, trading volume really started to surge earlier this week. Among other reasons, small-time investors are finally able to buy options on HOOD shares. Over 172 million shares changed hands on Wednesday alone, more than surpassing the 102.5 million shares traded during Robinhood’s earlier IPO.
Despite the anticipation, Robinhood’s IPO was largely disappointing. Shares initially plummeted around 10% as traders didn’t seem impressed with the company’s first day of trading. However, with Cathie Wood’s Ark Invest buying up another 3 million shares on Monday, in addition to the 1.8 million it bought when Robinhood first went public, the sentiments of tech investors seemed to change.
“It looks like ARK Investments took a big stake and it would seem as though the retail traders are getting involved as well. It’s not normal for a stock of that size to move quite that quickly. I think it would deter institutional investors,” said John Heagerty of Atlantic Equities. Heagerty has a $65 price target for Robinhood with an enthusiastic buy rating.
Robinhood became a hot topic earlier this year when the meme-stock trend was first breaking out. As shares of GameStop (NYSE: GME) continued to skyrocket, Robinhood got in trouble for supposedly pausing trading for regular users on its platform so that institutional clients, who were short-selling GameStop, could quietly exit their position. Following the event, many traders said that they would never trust Robinhood again after that debacle. However, several months later, Robinhood still remains a popular service used by beginner traders, and trading interest in the stock itself remains as high as ever.
Shares shot up as much as 65% on Wednesday, with the stock having more than doubled since the week started began. Traders on WallStreetBets are already singling out Robinhood as the next meme stock worth driving up, although the stock doesn’t have that much short interest, a previously common attribute of most quote-on-quote meme stocks. Other trading-based companies that have gone public this year, like Coinbase (NASDAQ: COIN), have also done quite well in the months after going public.
Robinhood Company Profile
Robinhood Markets Inc is creating a modern financial services platform. It designs its own products and services and delivers them through a single, app-based cloud platform supported by proprietary technology. Its vertically integrated platform has enabled the introduction of new products and services such as cryptocurrency trading, dividend reinvestment, fractional shares, recurring investments, and IPO Access. It earns transaction-based revenues from routing user orders for options, equities, and cryptocurrencies to market makers when a routed order is executed. – Warrior Trading News
