Robinhood Stock Falls 8% in Nasdaq Debut Despite $29 Billion Valuation
Robinhood starts trading on the Nasdaq under the ticker HOOD but closes down more than 8 percent on its first day. The popular trading app raises close to $2 billion while facing scrutiny over recent volatility-driven losses.
Robinhood begins trading on the Nasdaq under the ticker HOOD, closing its debut session down more than 8 percent at $34.82 per share. The online brokerage prices its initial public offering at $38 per share, the low end of its expected range, giving the company a market capitalization of roughly $29 billion. By selling 52.4 million shares, Robinhood raises close to $2 billion in the highly anticipated offering led by Goldman Sachs and JPMorgan Chase.
The company hits the public markets it seeks to democratize for amateur investors, bringing its total client base to 18 million as of March 2021. Founded in 2013, the free trading pioneer forces the brokerage industry to drop commissions and attracts millions of younger traders during the coronavirus pandemic. Co-founders Vlad Tenev and Baiju Bhatt each sell about $50 million worth of stock in the debut.
Unlike many recent public offerings, Robinhood shows a profit in 2020 with net income of $7.45 million on revenue of $959 million. However, the brokerage reports a massive $1.4 billion loss in the first quarter of 2021 due to emergency fundraising tied to the GameStop trading mania. Despite this first-quarter setback, the company generates $522 million in quarterly revenue, marking a staggering 309 percent increase from the previous year.