After retail traders flooded into stocks, Robinhood soared


Robin Hood Update

Robinhood is a trading application used by many retail investors to promote the crazy rebound of “memetic stocks” at the beginning of this year. It has acquired the characteristics of meme stocks themselves.

The stock price of the brokerage soared by 82% on Wednesday, leading to multiple suspensions of trading on the Nasdaq exchange, and its market value once climbed to US$71 billion.

Less than a week after Robinhood’s disappointing listing, the stock price rose Initial public offeringTraders and analysts said that this week’s reversal reflects the acceptance of the stock on social media by retail investors and the new availability of options contracts related to Robinhood stock.

Robinhood’s commission-free trading attracted a large number of retail investors during the pandemic, who have time and money to save. Earlier this year, the California-based company’s app was a central place to trade so-called meme stocks, as customers organized on social media platforms such as Reddit to elevate the troubled theater chain AMC and video game retail Commerce and other stocks such as GameStop.

But the company restricted the trading of several severely shorted stocks in January to meet the margin requirements of its clearing house, which also angered many customers.One day, traders liked the company’s Debut Last week, it fell 8.4% on the stock market, which was the worst performance since its scale listing.

As some well-known investors bought the stock, including the rebound in recent days Cathy Wood, Who manages the investment fund Ark Investment.

According to data from retail investor sentiment tracker Breakout Point, since the IPO, investor sentiment in Robinhood stock has increased on social media sites such as Reddit. On Wednesday morning, mentions of its stock symbol surged on Reddit.

Ivan Cosovic, the founder of Breakout Point, stated that retail investors on Reddit have begun to rebound around the $60 stock price target-up from Friday’s $35.15-and “for Cathy Wood cheer”.

“This is an IPO that the retail industry hates very much, but Cathie bought it, and some retail investors on the sidelines decided to give it a try,” he added. “The rest is Fomo”, or “fear of missing out.”

Data provider Vanda Research pointed out that retail traders started turning to the stock in large numbers on Tuesday, helping the stock rise 24% to close above its listing price.

Chris Murphy, co-head of derivatives strategy at trading company Susquehanna International Group, said that options trading on Robinhood stock also began on Tuesday. In the past 18 months, these derivatives that allow traders to speculate on the potential trend of stocks have been particularly popular with retail investors.

Traders who sell call options to investors usually buy Robinhood stock to hedge the risk of driving the market upward.

Wednesday’s gains pushed Robinhood’s market valuation briefly higher than hundreds of US blue chip companies, including automaker Ford, food company Kraft Heinz, and asset management company T Rowe Price.

By 12.30 pm in New York, more than 101 million shares had changed hands. The stock gave up about half of its previous gains, but still rose 33% to $62.19.

On the morning of the IPO, when asked whether Robinhood would become a meme stock, co-founder Vlad Tenev said: “I don’t know if people understand that high retail participation in the market means What, but I think it is fundamentally a very good thing, and we are very happy to be a part of it.”


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