Vladimir Tenev, CEO and co-founder of Robinhood, is shown on an electronic screen at Nasdaq in New York's Times Square following his company's IPO, Thursday, July 29, 2021. Robinhood's stock is flying again Wednesday, Aug. 4, jumping so much that trading was temporarily halted three times in the first half hour after the market opened. (AP Photo/Mark Lennihan, File)
NEW YORK (AP) — Robinhood's stock is flying again Wednesday, jumping so much that trading was temporarily halted three times in the first half hour after the market opened.
Robinhood Markets was up 44.4% at $67.64, as of 1:45 p.m. Eastern time, accelerating what's already been a blistering week of gains. Earlier in the morning, the stock was briefly up by nearly 82%. It's a sharp turnaround from last week's lackluster debut for the stock, when it sank 8.4% from its initial price of $38 on Thursday.
Even ahead of its initial public offering, experts warned that Robinhood's stock could be primed for a more jagged ride than others on Wall Street because of its popularity among smaller investors.
Robinhood reserved a bigger-than-usual chunk of its IPO shares for smaller investors, which fits with its mission of “democratizing finance.” The company has introduced a new generation of younger and novice investors to the stock market, thanks to its zero-trading fees and easy-to-use app. But the move also gave fewer shares to big institutional investors, who have a reputation for being steadier holders of stock for the long term.
Robinhood has found support from some big names on Wall Street. Cathie Wood, a star stock picker who focuses on innovative companies, has bought shares, for example.
Her flagship ARK Innovation exchange-traded fund owns nearly 4.9 million shares, making Robinhood the fund's 29th largest holding. The fund has about $25.5 billion in total assets.
Outside of that, though, analysts were grasping for explanations for the surge in the stock. For some, it was reminiscent of the explosive moves higher for GameStop and other “meme stocks” earlier this year.
Those stocks soared suddenly to heights that professional investors called irrational. Many were beaten-down companies in the midst of a turnaround, and they caught waves of interest from smaller-pocketed investors who egged each other on in online forums to buy more.
Robinhood has created plenty of passion, among users and critics alike, and the polarizing effect has shown in its wild, short time on Wall Street. After opening at $38 last week, it sank as low as $34.82. It took less than four days to more than double, briefly touching $85 on Wednesday morning.
Robinhood is already delivering the strong growth that Wall Street is always hungry for: Revenue soared 245% last year to $959 million. It has amassed an estimated 22.5 million funded accounts since its 2013 founding, as customers trade everything from stocks to options to crytpocurrencies.
But Robinhood has also paid more than $130 million in recent years to settle a long list of accusations by regulators. Critics say Robinhood encourages unsophisticated investors to make trades too often that may be too risky, and regulatory scrutiny is likely to stay high.
Some users are also still angry at Robinhood and other brokerages for temporarily barring them from trading shares of GameStop and other meme stocks early this year. But as its performance this week has suggested, Robinhood may be turning into something of a meme stock itself.
“I hate Robinhood, but I got in and made $1k in 20 minutes,” said one user on Reddit's WallStreetBets forum, a central hub for the explosion of meme stocks this year. 7 Tech Stocks That Are Heating Up as Anti-Trust Talk Cools Down
For the better part of the last year, Congress has had “big tech” in its crosshairs. But the reasons why largely depend on what side of the aisle a particular individual was on.
On the one hand, there are politicians who are concerned about the role that technology companies play in restricting the free flow of information. On the other hand, there are politicians that are concerned about these companies' stranglehold on competitors and innovation.
But big tech scored an important, albeit not final, victory in late June. At that time, a U.S. judge dismissed two separate complaints against Facebook (NASDAQ:FB). The question in front of the judge was whether Facebook held a monopoly on social media. Due to a surge in the company’s stock price after the ruling, Facebook became a member of the exclusive $1 trillion market cap club.
While big tech companies will remain under the Congressional microscope, there’s no denying that investors are looking at the ruling as a signal to rotate back into tech stocks. And that’s the focus of this presentation. What tech stocks should you be buying as anti-trust pressure eases?
It would be easy to start and end the list with the FAANG stocks. After all, the motto “Keep it Simple Stupid” comes to mind. There are simply those companies that offer products that are changing our lives now and will continue to do so in the future. And furthermore, customers will continue to pay for their products.
And I do have a couple of these stocks on my list. But the bulk of the stocks on this list are less expensive alternatives to at least one of the FAANG stocks. It doesn’t mean they’re superior companies, but a rising tide tends to lift all boats. And that means these companies have a large upside and you can purchase the stocks for a lot less. View the "7 Tech Stocks That Are Heating Up as Anti-Trust Talk Cools Down"