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Robinhood, the free-trading app popular with millennials, fell by more than 10 percent moments after its highly anticipated Nasdaq stock debut.
Trading in Robinhood — known for its role in the “Reddit Rally” retail trading phenomenon — kicked off at $38 a share around 12:30 p.m. on Thursday.
The firm’s Wall Street bankers had priced the stock at the low end of its $38-to-$42 IPO range in an effort to secure a successful first day of trading.
But the shares fell anyway to as low as $33.35 before recovering slightly to end the day down 8.37 percent at $34.82 a share. The closing price gives the Menlo Park, Calif., company a market value of $29 billion.
“This kind of trading isn’t unusual for an open — especially for a company this controversial,” said Tim Anderson, managing director at TJM investments.
Still, the IPO was closely watched in part because Robinhood went public despite a slew of potential regulatory challenges. CEO Vlad Tenev was called to testify before Congress in February over the company’s controversial decision to halt trading in stocks popular with the Reddit Rally crowd, like GameStop and AMC, resulting in questions about its business model.
President Biden’s SEC chief Gary Gensler has since vowed to look into the company’s practice of selling customer order flow to high-speed trading firms like Citadel. “There are costs,” Gensler has said of Robinhood’s no-fee trading model. “The costs are below the surface.”
As The Post reported on Wednesday, Robinhood has been the subject of short-selling chatter by both institutional and retail investors, some of whom are still upset over the company’s handling of out-of-control trading in stocks like GameStop earlier this year.
Robinhood began trading on Nasdaq under the ticker HOOD after selling 52.4 million shares at $38 a piece, helping it raise $2 billion.
Even with the stock plunge, Robinhood’s $29 billion valuation marks a massive leap over its $11.7 billion valuation in September. It now boasts 18 million users, helping revenue surge during the first quarter to $522 million, up from $128 million in the same period last year.
Robinhood, which has made it a mission to “democratize finance,” also sought to democratize its IPO led by banks Goldman Sachs and JPMorgan.
In a nod to its retail investors, Robinhood set aside around 20 to 30 percent of its shares so users could buy stock at its listing price before it begins trading.