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Robinhood surges more than 24%, blows past $38 IPO price

Robinhood surges more than 24%, blows past $38 IPO price

03 Aug 2021

Vlad Tenev and Baiju Bhatt react to the first trade on Robinhood Markets IPO Listing Day on July 29, 2021 in New York City.

Cindy Ord | Getty Images

Shares of Robinhood soared Tuesday, pushing the newly public stock trading app well above its IPO price of $38 per share last week.

Robinhood went public last Thursday on the Nasdaq under the ticker HOOD, hitting the public markets it seeks to democratize. The stock priced at $38 per share, the low end of its offering range. It opened at that price on Thursday but then fell 8% on its first day and had largely traded below that price, until Tuesday.

Robinhood’s stock closed at $46.80 per share, up 24.2% on Tuesday.

The Menlo Park, California-based company appears to be garnering attention from retail investors on Tuesday, after giving roughly 25% of its IPO shares to its own clients. HOOD is a “top traded stock” on Fidelity, which is generally a good proxy for individual investor interest on a given day.

There have been 8,988 buy orders and 7,931 sell order of Robinhood on Fidelity on Tuesday. The ticker also appears as a top mentioned stock on Reddit’s WallStreetBets, according to Swaggy Stocks, which aggregates the posts.

“Although we have come to expect 40% surges on the first day of trading, Robinhood talked to a wider swath of investors, including significant retail to push the boundaries on pricing,” Greg Martin of Rainmaker Securities said.  “I believe now, the long-term investors who see the incredible long-term value of Robinhood are moving the stock, as the short-term investors have largely fled the stock.”

Bulls love Robinhood for its massive growth, especially during the coronavirus pandemic and GameStop trading mania. Robinhood — which offers equity, cryptocurrency and options trading, as well as cash management accounts — had 18 million clients as of March 2021, up from 7.2 million in 2020, an increase of 151%. The company estimates funded accounts reached 22.5 million in the second quarter.

“As Robinhood branches out into other forms of finance, including ‘buy now, pay later’ cards, I think [CEO Vlad Tenev’s] army of 22 million users will grow and become more powerful,” CNBC’s Jim Cramer said on “Mad Money” Monday night. “That’s why I’m telling you that Robinhood can be bought here,” Cramer added.

He also said Robinhood could acquire another fintech company in order to expand more into the payments space, which could boost the stock even further.

Ahead of the IPO, Atlantic Equities gave Robinhood an overweight rating and $65 per share 12-month price target. Most of Wall Street is still deliberating its rating on the stock because of mandated quiet periods on research from underwriters on the deal.

“We believe this superior user growth will continue given the success of the referral program and the product appeal among its target demographic,” said Atlantic Equities analyst John Heagerty. “We also see opportunity to build out the product portfolio to drive faster revenue growth.”

Robinhood has also been getting a vote of confidence from Ark Invest’s Cathie Wood since the debut.

Wood purchased about 1.85 million shares of Robinhood on Friday, adding to the 1.3 million shares she bought Thursday. Wood’s total position is worth roughly $147.5 million, based on Robinhood’s current price.

“Nothing would be better than for [Robinhood] to be priced perfectly and stay the same price for a couple of months,” early Robinhood investor Jason Calacanis told CNBC last Thursday. “Any retail investors that might be new to the game, it would be a great lesson for them to buy and hold things for a long time. That is really where the great wins comes from.”

Robinhood is a five-time CNBC Disruptor 50 company and topped this year’s list. Sign up for our weekly, original newsletter that offers a closer look at CNBC Disruptor 50 companies like Robinhood.