It’s been a long road, but as of the end of this week, the controversial trading app Robinhood is officially a publicly traded company, recently releasing their IPO at $38 a share.
After being hit with the spotlight time and time again this year, and recently having to pay a $70 million FINRA fine for misleading its customers (the largest fine ever given by the only one day before their IPO (the largest fine ever given by the brokerage overseers) company officials may have thought all their troubles were behind them, but it could be they are only just beginning…
The Long and Winding Road of Robinhood
It was only a few short months ago when the popular free stock trading app found itself entangled in a web of legal trouble when a group of traders utilized the app to make a small fortune in Gamestop investments.
… And it was only a few days ago when the trading company agreed to pay a whopping $70 million in penalties for its systemwide outages and misleading communication and trading practices ($57 million in fines and $13 million in restitution to thousands of clients.)
Yet it seems that this company simply can’t catch a break as the one ray of light at the end of their tunnel was the upcoming IPO release, in which company officials expected to set records for such a stock. Needless to say, they would be disappointed…
The IPO
Considered by most a disappointing IPO opening, prices fell as much as 10% in their NASDAQ first-day debut from $38 to $34.82 a share. That brought the company’s market capitalization from a $32 billion value to a $29 billion value in one day alone.
Trading under the ticker HOOD, the stock trading app among retail investors in its opeing hours but soon hit a brick wall and slowly began its decline where it currently sits stagnate.
Despite the negative feedback the stock is getting in the markets, founders Baiju Bhatt and Vladimir Tenev are both laughing all the way to the bank as they each sold about $40 million worth of stock.
The Future of Robinhood
Though hopeful that their days of worrying are over, Robinhood may still have some future risks to tackle.
Most notably the Securities and Exchange Commission is reviewing the ethical standing of “payment for order flow”, a controversial practice that accounted for roughly 80% of Robinhood’s revenue in the first quarter, allowing the company to collect a record $331 million in payment!
That being said, Robinhood may indeed have a successful future ahead of it, but at this rate, it’s sure to be one filled with all sorts of hurdles for them to jump.
Learn More Here…
If you’re interested in hearing more about today’s markets and tomorrow’s profits, we encourage you to join the latest broadcast of Ask the Pros below where host Celeste Lindman is sitting down with market experts Tony Saliba, Roger Scott and Tom Busby to reflect on the events of this past week and their goals and plans for the days ahead.
P.S. – DTI founder and 40-year market veteran Tom Busby is opening up his LITTLE BLACK BOOK… A book thats pages are filled with some of the best kept strategies Wall Street never thought you’d see!