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Online broker Robinhood is flying high after a failed stock market launch


Shares of the online broker Robinhood gained more than 80 percent in value on Wednesday. After the disappointing IPO, small investors are now striking - after a prominent fund manager bought it.

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Price slump after IPO: Robinhood advertisement in Times Square

Photo: Mark Lennihan / AP

Many Internet users have used the online broker Robinhood to purposefully drive up share prices - now the provider itself is the subject of wild price speculation.

After Robinhood's unsuccessful debut on the stock market last week, the prices of the platform's securities have now skyrocketed for the second day in a row.

The demand for shares of the online broker was so high on Wednesday that trading with them was temporarily suspended.

In the meantime, the papers have cost more than $ 85, an increase of 81 percent.

The day before, the shares had climbed above the issue price for the first time since the IPO.

Extensive share purchases by star investor Cathie Wood for her exchange-traded flagship fund Ark Innovation are said to be responsible for the significant recovery.

The ARK Innovation ETF now carries nearly five million Robinhood shares valued at approximately $ 229 million, according to Reuters news agency.

Is Robinhood going to become a meme stock itself?

"People are trying to jump on Cathie Wood's vote of confidence in Robinhood stock," said Thomas Hayes, executive director of Great Hill Capital in New York.

Your entry was apparently the decisive factor for many other investors.

Small investors play a special role for Robinhood shares: the broker has reserved a larger part of its shares for the IPO than is usual for amateur shareholders.

The company is targeting a new generation of younger investors with smaller budgets, who are supposed to trade there via smartphone and free of charge.

However, this also resulted in fewer shares being given to large institutional investors who are more known for holding a share for the long term.

The broker was meanwhile the second most frequently traded value on the US stock exchanges on Wednesday.

In the relevant Internet forum "WallStreetBets" on Reddit, which is the focus of the current "meme share rally," Robinhood is said to have been the most cited share of the past 24 hours, according to a trader.

Robinhood investors recently had to endure strong price fluctuations.

After an issue price of $ 38 last week, the stock fell to $ 34.82.

After the most recent soaring on Wednesday, the share price fell sharply again.

Robinhood had increased its revenue by 245 percent to $ 959 million in 2020.

Since its inception in 2013, the company has built an estimated 22.5 million funded accounts.

More than half of the customers are first-time investors.

According to critics, the company encourages inexperienced investors to engage in risky trades.

Some users are also still angry with Robinhood and other brokers for being temporarily banned from trading those stocks earlier this year when GameStop and other "meme stocks" rocked Wall Street.

Now the company itself could become a kind of meme stock - which can also mean that the steep rise is followed by an equally steep drop.

apr / Reuters / dpa-AFX / AP

Source: spiegel

All business articles on 2021-08-04

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