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%.