The Limited Times

Now you can see non-English news...

Robinhood IPO: Disappointment in Sherwood Forest

2021-07-29T18:36:16.343Z


The online broker Robinhood had big plans for its IPO - but the debut was rather poor: The shares lost ten percent in value. The company used an unusual method.


Enlarge image

Robinhood advertisement in Times Square: wall prelude

Photo: Mark Lennihan / AP

The founders of the securities broker Robinhood had probably imagined their premiere on the trading floor differently: The shares of the broker fell by more than ten percent to 34 dollars when they debuted on the Nasdaq technology exchange.

The neobroker, who promises its users particularly easy access to the financial markets, had previously found it difficult to get hold of the papers from investors, as had been hoped.

Ultimately, the shares had gone on sale at an issue price of $ 38, actually Robinhood had targeted up to $ 42.

At the premiere, Robinhood also used an unusual method - shares were reserved for their own users.

Overall, Robinhood started with an overall valuation of almost 32 billion dollars on the Nasdaq, which was rather poor in view of the high expectations.

The discount broker, who had previously hit the headlines during the turmoil over hot stocks of US companies such as GameStop, had actually aimed for a valuation of around 35 billion dollars.

Robinhood has seen rapid growth recently, but is controversial because of its business model and has some legal issues. The share is therefore considered risky.

The company from Menlo Park, California, founded in 2013, is a pioneer of a younger generation of investors in the US financial market with its easy-to-use app for trading stocks, options and cryptocurrencies. Robinhood has many critics, however. The broker does not take any fees from users, but earns money by brokering their transactions. That is why Robinhood is confronted with allegations of encouraging customers such as a gaming provider to do as much and risky trading as possible - and recently received a hefty fine for being misled and lax checks. The company defends its business model by "democratizing" the financial market.

When it went public, Robinhood put back up to 35 percent of its shares for its own users in an unusual move.

In doing so, the fintech company took a risk - the debut was more unpredictable than normal IPOs, in which investment banks try to ensure a regular process and stable prices.

Robinhood put its papers on the Nasdaq under the ticker symbol "HOOD"; according to Bloomberg, it was the seventh largest US IPO this year.

Robinhood more than doubled its number of users in the past year.

In the second quarter it was 22.5 million.

mic / dpa-afx

Source: spiegel

All business articles on 2021-07-29

You may like

Business 2024-01-30T18:11:55.564Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.