Category: HOOD

HOOD – What Options Trading Says About Robinhood's Big Day

Vlad Tenev, left, and Baiju Bhatt, founders of Robinhood, on Wall Street in lower Manhattan last Thursday after their company went public.

Spencer Platt/Getty Images

In the past year and a half, options trading has hit record highs as retail investors plow money into calls and puts. All-or-nothing “YOLO” options bets have become common on platforms like

Robinhood Markets,

which has opened the products to a new generation of traders.

Now, Robinhood (ticker: HOOD) itself is in the midst of an options frenzy, which may help cause the stock to be volatile for an extended period.

Just five days after its market debut, options activity around Robinhood has been spiking, and is extremely high even compared with other hot new stocks, according to Susquehanna International Group’s Christopher Jacobson.

As of about 12:20 p.m. Eastern time, about 75,000 calls and 95,000 puts had traded, he noted. Compare that with the 13,000 calls and 15,000 puts traded in

Coinbase Global

(COIN) stock on the first day that options were available for that stock earlier this year.

The highest volume in any Robinhood-related options product was for the $70 call option — an extremely bullish bet for a stock that made its debut last Thursday at $38. Traders were clearly onto something, given that shares were recently trading at $69.25, up 48% on the day.

That said, most people in the options market are wagering that the stock goes in the other direction.

Christopher Murphy, Susquehanna’s co-head of derivatives strategy, noted that the bulk of the options activity was in bearish puts. The most active of those contracts were puts that pay off if Robinhood falls to $30 or $20 by Aug. 20. It’s not yet clear whether they are retail or institutional players.

“All of it appears to be small lots, but that doesn’t necessarily mean it’s all retail,” he wrote. “Because the options are so thin and the volatility is so high, it makes sense all the trading (whether institutional or retail) would be in small lots.”

Options trading can sometimes affect the underlying stock itself. Companies that sell calls, for instance, often buy the underlying stock itself to hedge against potential losses, and thus can cause more buying pressure on a stock — even resulting in what is known as a “gamma squeeze”.

Murphy, however, doubts that’s what’s happening with Robinhood so far — largely because puts currently outweigh calls. “The option activity has an impact on stock, but I think the volume is more likely following the momentum than being the direct cause,” he wrote.

He also cautioned investors that buying puts in hot stocks can be a dangerous strategy, because options premiums get pricier as implied volatility rises. So even traders who get the direction of a stock right can end up in a weak financial position.

“Something to keep in mind if buying puts in Robinhood … we saw situations in




where stock eventually traded lower, but so did implied volatility and those two effects canceled each other out, dampening profits to long puts even when stock traded lower,” Murphy wrote.

Write to Avi Salzman at

HOOD – RobinHood Markets enjoys stonking rise as meme traders develop a sense of poetic irony

The trading app developed by Robinhood Markets Inc made its name as the trading platform of choice of those dealing in so-called meme stocks.

Now, almost inevitably, Robinhood itself has become a meme stock.

Oh, how we smiled when the company saw its shares tumble on their first day of trading even after the much-hyped initial public offering (IPO) was priced right at the bottom end of the indicated pricing range.

The stock, floated at US$38, fell to US$34.82 on its first day of trading but as in all the best Robin Hood adventures, when things looked bad, there has been a surprise turnaround.

Granted, the surprise normally comes at the end not halfway through the first reel of a three-reel film but with the shares now trading around US$60 on the company’s fifth day as a publicly listed company, those who punted on the stock won’t be complaining.

The app’s users bought about around a quarter of the shares on offer in the flotations, according to the Bloomberg news agency.

At one point today, the stock topped US$80 but in volatile trading, we have seen a ding-dong battle between believers and sceptics. The stock is the second most heavily traded stock on US exchanges and at one point, trading was so volatile that a time-out was called to enable investors and market makers time to gather their thoughts.

A stock for brave hearts

That must have irked the app’s users somewhat.

You can take away our freedom but you – hang on, that is the wrong film about a British semi-mythical hero portrayed by a bankable (non-British) actor.

Then again, one conspiracy theory says that the app’s users only clamoured for stock in the IPO so they could dump it in revenge for Robinhood blocking trades of meme stock favourite GameStop in February.

Some people apparently still have not got over the GameStop controversy.

Others seem to have a sense of humour about it.

In the time it has taken me to write this article, the shares have rallied to US$62.38, which is up 34% on the day.

In anyone’s language, that’s a stonking gain.

HOOD – Robinhood Cofounders Are $600 Million Richer Today After 24% Stock Surge

Shares of stock trading app Robinhood jumped by 24% on Tuesday—putting the stock well above its IPO price of $38 per share last week—and adding around $600 million each to the net worths of the company’s two billionaire cofounders.


Based on a $46.80 closing price, Robinhood cofounders Vlad Tenev, 34, and Baiju Bhatt, 36, are now worth $2.9 billion and $3.3 billion, respectively, according to Forbes’ calculations. Tuesday’s stock surge added $557 million and $627 million, respectively, to Tenev and Bhatt’s net worths.

Robinhood went public on the Nasdaq last Thursday under the ticker “HOOD,” in a lackluster IPO where shares fell by 8% on the first day of trading. 

The stock had largely continued to trade below its starting IPO price of $38 per share—until Tuesday, when shares surged 24%, thanks to growing interest from both retail investors and Wall Street. Robinhood was a “top traded stock” among customers on brokerage giant Fidelity and was also a trending topic on forums like Reddit’s WallStreetBets on Tuesday. 

While many analysts and traders have been carefully watching the stock, some Wall Street veterans have recently given it a vote of confidence. Influential hedge fund manager Cathie Wood of ARK Invest, for example, recently added 1.85 million shares to her position in Robinhood. In total, her firm now owns around 3.15 million shares, worth nearly $150 million by Tuesday’s close.

Wood, whose ARK Invest manages some $60 billion in assets, has a net worth of $400 million, according to Forbes’ estimates.

Another likely reason behind the stock’s rally: CNBC host Jim Cramer gave Robinhood his blessing in a segment on Monday night, highlighting the online brokerage’s potential to mobilize its 22 million users and branch out into other forms of finance.

Robinhood had a $29 billion market capitalization after going public last week—a rich multiple of 30 times the company’s $959 million in 2020 revenues. After Tuesday’s stock surge, markets now value the company at $39 billion.

Tenev and Bhatt launched the business in 2013 with their often repeated mission to “democratize finance for all” after meeting as undergraduates at Stanford University. They each own around 8% of the company, according to filings.


HOOD – Robinhood surges 10%, runs past $38 IPO price

Vlad Tenev, CEO and co-founder Robinhood Markets, Inc., is displayed on a screen during his company’s IPO at the Nasdaq Market site in Times Square in New York City, U.S., July 29, 2021.
Brendan McDermid | Reuters

Shares of Robinhood surged on 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 ticker HOOD. 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 has largely traded below that price, until Tuesday.

Robinhood’s stock last traded at $44.00 per share, up 17% on Tuesday.

Bulls love Robinhood for its massive growth, especially during the 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.

Cramer 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.

“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 on Thursday. Wood’s total position is worth roughly $124.5 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.”

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.

HOOD – 3 Signs a Growth Stock Is Better Than Robinhood

Robinhood Markets (NASDAQ:HOOD) completed its initial public offering on July 29, and it got off to a rocky start. The stock hit the market priced at $38 per share, but it quickly stumbled and closed out the day down roughly 8%. Shares regained some ground in the next session, and more volatile swings could be in the cards. 

It’s still far too early to count the commission-free trading company out, but there may be better options available for growth-focused investors. With that in mind, a panel of Motley Fool contributors has identified three signs a stock may be poised to deliver superior returns. Read on to see why they think keeping these characteristics in mind will help your portfolio. 

A rocket flying over an arrow.

Image source: Getty Images.

1. It lives up to its mission statement

Keith Noonan: Robinhood is posting incredible user growth, adding 5.5 million new funded accounts last quarter and bringing its total funded accounts to 18 million at the end of the period. The company’s platform has brought accessible, commission-free trading to a wide range of new investors, but the lead up to its public debut was also fraught with failures and missteps that raise questions about the business’s long-term outlook. 

Consider that the trading platform went down three times in one week during the March 2020 market crash. With many Robinhood users participating in day trading and risky options plays, the service repeatedly going down during one of the most volatile periods in stock market history raises red flags. A lot of people got burned because of those outages. Unfortunately, those weren’t the only instances of investors being kept from trading in crucial moments. 

When meme-stock and short-squeeze manias were hitting peaks, Robinhood locked users out of buying shares in GameStop, AMC Entertainment Holdings, and a handful of other hot names. Those decisions didn’t stop the company from continuing to add new accounts at an impressive clip in subsequent months, but many existing users were understandably upset, and too many moves like that could damage the platform’s viability.  

Robinhood’s stated mission is to “democratize finance for all” and make financial markets more accessible, but the company has frequently come up short of those goals, and it’s not offering anything particularly special now that most major brokerages and new upstarts also offer commission-free trading. Robinhood has attracted users thanks to its easy-to-use mobile interface and brand power. There’s no denying that the company is posting eye-catching member growth and that it has played a big role in reshaping the investing world, but I generally think investors will be best served by backing companies that reliably live up to their mission statements. 

2. It stays off regulatory radars

James Brumley: It’s been obscured by the public offering’s hype, but Robinhood debuted into regulatory scrutiny no young company needs to deal with.

The issue is the trading platform’s payment for order flow, or PFOF. In simplest terms, the reason the service is “free” is that Robinhood is being compensated to route trade orders to and through middlemen that may not be giving investors the best possible price at that time.

Yes, it’s the potential conflict of interest it seems like it is.

To be fair, many major online trading outfits like Charles Schwab and E*Trade accept payments from certain market makers for facilitating some trades. But Robinhood generates up to 80% of its total revenue this way, which sets the stage for temptation in the future. When the majority of your business forces you to choose between doing what’s best for your customer or what’s best for you, which are you going to choose when things turn challenging?

That’s not an accusation, to be clear, and most Robinhood customers don’t seem to care — we’re talking pennies per trade here.

Robinhood’s sweeping success with the payment for order flow model, however, has already grabbed the attention of the SEC and congressional lawmakers. Both groups may be mulling regulatory changes that could shatter the company’s core revenue stream. Clearly it’s the sort of thing investors don’t want to see looming for their picks. Growth companies should be of no interest whatsoever to any group with the authority to disrupt their business. Think Facebook before it got caught up in the whole censorship/publisher debate.

3. It’s not relying on a hot streak

Daniel Foelber: Robinhood has created a new generation of investors. Commission-free trading, a user-friendly interface, and the ability to invest in stocks, options, cryptocurrency, and more all from one platform have made finance more mainstream. In many ways, Robinhood led the charge on fractional shares, lowered the barriers to entry for investing, and is even spearheading the new concept of letting retail investors participate in initial public offerings on the primary market. 

The GameStop debacle certainly tarnished Robinhood’s brand, but the data shows that the company continues to attract and retain users. In its Form S-1 filed with the SEC on July 1, Robinhood reported data for March 2021 (among other things). Highlights include that over 50% of its customers are first-time investors and over 80% of customers were organically acquired or came from referrals. Word-of-mouth marketing and referral incentives are proving to be an effective strategy for attracting new customers.

Robinhood’s 2020 revenue was $720 million, up 421% year over year. Amazingly enough, its first-quarter 2021 revenue was $420 million, up 440% from Q1 2020. The growth numbers look impressive, but Robinhood lacks a lot of qualities that are essential for a good growth stock.

Many other leading brokerages have implemented similar features (such as fractional shares). And with the rise of Coinbase Global, BlockFi, Gemini, Celsius, Kraken, and other cryptocurrency exchanges and custodians, Robinhood’s crypto offering is less enticing.

Furthermore, much of Robinhood’s revenue comes from what it calls “transaction-based revenues.” To quote its S-1, “because a majority of our revenue is transaction-based (including payment for order flow), reduced spreads in securities pricing, reduced levels of trading activity generally, changes in our business relationships with market makers and any new regulation of, or any bans on, PFOF and similar practices may result in reduced profitability, increased compliance costs and expanded potential for negative publicity.” 

As our colleagues Brian Stoffel and Brian Feroldi pointed out, there are pros and cons of Robinhood’s business. For Robinhood stock to justify its current valuation, the company needs markets to remain volatile, trading volumes to stay high, user count to grow, and regulations to work in its favor. With fierce competition knocking on its door, Robinhood’s risks seem to outweigh its rewards.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

HOOD – Robinhood tumbles after retail investors buy quarter of IPO shares

Robinhood Markets Inc aimed at the lower end of its initial public offer price target and, partly as a result of its unconventional listing approach, saw its shares fall some way short of the bullseye on the first day of trading.

The online broker and app operator, which claims to “democratise investing” and was a key part in the bear squeezes and Reddit-inspired stock market raids at GameStop and AMC Entertainment earlier this year, had set a pricing range of up to US$42 but decided on the low-end IPO price of US$38 per share.

This gave it an initial valuation of roughly US$32bn.

The unusual element of the IPO was that Robinhood allowed an unusually large allocation of the IPO shares to be sold to its own retail investor customers, offering them up to a third of its shares being listed.

In the end the app’s users bought about around a quarter of the shares, according to Bloomberg.

On the first day of trading the share price popped to almost US$39 before tanking as low as US$33.35 and eventually finishing at US$34.82, a fall of 8.4%.

HOOD – Robinhood CEO on the meme stock craze: 'I think it's a real thing'

Robinhood CEO and co-founder Vlad Tenev on Thursday defended retail clients that invest in so-called meme stocks, saying the phenomenon is real and gives embattled companies access to capital they otherwise wouldn’t have.

“I think it’s a real thing. There’s customers that love these companies, they want them to thrive,” Tenev told CNBC’s Andrew Ross Sorkin on Thursday ahead of the stock trading app’s Nasdaq debut. “You’re seeing [meme stocks] also get resources that allow them to hire really good management teams, in some cases, and then build for the future.”

Robinhood experienced record levels of new, younger traders entering the stock market during the pandemic. That surge has continued into 2021, marked by frenzied trading around meme stocks.

The millennial-favored stock trading app found itself in the middle of a firestorm in January amid the short squeeze in GameStop, which was partially fueled by Reddit-driven retail investors.

“I think what’s interesting with what we’ve seen in retail investing over the past year is that a lot of these companies have been hit hard by the pandemic,” Tenev said. “It started with some of the airlines and then followed with some of the retailers, some movie chains and brick and mortar. You have the institutions that are basically writing these companies off and then retail investors coming in and keeping them up and supporting them.”

At the height of the so-called meme stocks’ surge, Robinhood restricted trading of certain securities due to increased capital requirements from clearing houses. Robinhood raised more than $3.4 billion in a few days to shore up its balance sheet.

“I don’t know if people have understood the ramifications of what high retail participation in the markets means but I think fundamentally its a very good thing,” added Tenev.

Trouble selling shares

Robinhood — which is expected to start trading under ticker HOOD —sold shares in its IPO at $38 a piece, valuing the company at about $32 billion. Robinhood priced shares at the low end of the $38 and $42 range. The online brokerage sold 52.4 million shares, raising close to $2 billion.

It was not until roughly 9 a.m. ET that Robinood and its underwriters were finished allocating its IPO shares, an unusual circumstance for a syndicate at that point in the process. Goldman Sachs and JPMorgan Chase are the lead investment banks on the deal.

CNBC’s David Faber said an institutional source said “They’re begging us to take Robinhood shares,” Faber said on “Squawk on the Street” before the opening bell on Thursday. “And I said ‘what do they got left?’ and he said ‘lots,'” Faber added.

Robinhood — which planned to allocate 20% to 35% of its IPO shares to its retail clients — was reportedly sending messages late Wednesday to those retail investors about buying shares, according to CNBC’s Leslie Picker.

“Mad Money” host Jim Cramer said Robinhood’s IPO is a “must-work deal.”

“I think retail sentiment is on the line because these are people who want very much to make money and don’t really understand the process because the process is pretty arcane,” Cramer said.

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

HOOD – Robinhood prices IPO at $38 per share raising $2B

Robinhood Markets Inc. will begin trading as a public company on Thursday following the pricing of its initial public offering.

The company says it priced 55 million shares at $38 a share, which comes in at the low end of the $38 to $42 offering range.


 The offering should raise more than $2 billion and puts Robinhood’s valuation at about $32 billion.

This makes it one of the most valuable U.S. companies to have gone public year-to-date, according to Reuters.

The offering breakdown involves 52,375,000 shares from Robinhood and 2,625,000 shares are being offered by existing stockholders.

The shares are expected to begin trading on the Nasdaq under the ticker symbol “HOOD.”

The Robinhood IPO is being led by Goldman Sachs Group Inc. and JPMorgan Chase & Co.


In seven years, Robinhood has gone from its launch as a startup to an IPO.

It currently has a total of 17.7 million monthly active users and manages more than $80 billion in assets.

The company estimates second-quarter revenue between $546 million and $574 million and a net loss between $487 million and $537 million. It also forecasts a total of 21.3 million monthly active users.

Robinhood jumped into the spotlight earlier this year when millions of amateur investors downloaded its app to participate in the explosive rally in meme stocks like GameStop.


The company made the decision to restrict trading in as many as 50 stocks, including GameStop and AMC Entertainment Holdings. The move was made after a surge in trading volume strained its abilities to cover clearinghouse deposit requirements. The company was forced to raise $4 billion from early investors in order to meet the requirements.

Robinhood has faced a wave of legal trouble in the past year, some of which contributed to a record $70 million fine in June to settle Financial Industry Regulatory Authority allegations that the company misled investors about margin trading and was lax in its oversight of approvals for options traders.


It also reached a $65 million settlement with the Securities and Exchange Commission in September after allegations the company misled investors on how it made money and for failing to get the best price for customer orders. In both cases, Robinhood has neither admitted nor denied wrongdoing. 

HOOD – Could Wall Street and Main Street join forces to short Robinhood post-IPO?

Could Robinhood’s hotly anticipated IPO make it a short-selling target of both the hedge funds and the “Reddit Rally” retail crowd normally bent on destroying Wall Street?

The word on the Street — and among some users of Reddit’s popular WallStreetBets chatroom — is yes.

“Brokers are preparing for a lot of short sale demand,” Ihor Dusaniwsky, managing director at S3 Partners, a financial data firm that tracks short interest in publicly traded stocks, told The Post. “There’s a lot of talk about retail and institutional investors – like hedge funds – shorting the stock.”

If that happens, it would certainly make for an odd coupling. Reddit’s merry band of investors have made it their mission, in some cases, to destroy hedge fund short sellers by driving up stocks Wall Street has bet would decline, like GameStop and AMC.

People wearing face masks walk by the New York Stock Exchange (NYSE)
“Brokers are preparing for a lot of short sale demand,” Ihor Dusaniwsky of S3 Partners told The Post.
Andrew Kelly/REUTERS

Certainly, users of Reddit’s WallStreetBets chatroom have been talking about the prospect of shorting the Robinhood app as revenge for the trading app having halted purchases of “Reddit Rally” favorites like GameStop earlier this year.

“Based on what we have learned over the past year as a result of the Robinhood inability to effectively manage it’s capitalization to remain solvent during periods of volatility and volume, I believe the Robinhood IPO provides a fantastic short opportunity,” one user recently wrote.

He cited, among other concerns, his “distrust” of Robinhood CEO Vlad Tenev before signing off with this caveat: “This is of course based on my personal opinion, is not investment advice.” 

It’s not just retail investors who have been exploring the idea of shorting the popular retail trading app. Major institutions are also considering the possibility of shorting Robinhood, sources tell The Post.

And that, of course, has some Redditors warning each other NOT to short Robinhood, warning that its a complicated process with unlimited financial risk — and potentially a “trap” by Wall Street.

Vlad Tenev, co-founder and co-CEO of investing app Robinhood, speaks during the TechCrunch Disrupt event in Brooklyn.
One user of Reddit’s WallStreetBets forum cited his “distrust” of Robinhood’s CEO Vlad Tenev when explaining his short thesis.
Brendan McDermid/REUTERS

“You short Robinhood, you’re the one getting your ass squeezed,” one user wrote.  

If Robinhood becomes a short target, it would likely happen after the stock debut.

“Brokers have a limited capacity to approve short sales on IPO day but shorting can ramp up following the IPO,” Dusaniwsky said. “Because it will have a high percent of retail holdings there will be less short selling approved on the first day,” he added of Robinhood’s plans to reserve between 20 percent and 35 percent of its shares for retail traders.

The move that makes their inaugural day of trading riskier since they won’t have institutions promising to buy every last share — and could actually make the stock harder to short.