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Robinhood shares climbed to 82% early Wednesday – although the controversial trading company, which debuted on Wall Street last week, has not announced any new developments.
Robinhood recovered so much that trading was halted several times due to volatility. In recent exchanges, Robinhood has grown 30% more modestly.
Robinhood is suddenly attracting huge interest from retail investors, including WallStreetBets, the army of traders behind the GameStop surge at the start of the year.
“From the start, Robinhood was designed to be a meme stock,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors. He pointed out how Robinhood made the unusual decision to sell a large chunk of its stock to users and opened its road show to the public.
“When that happens, we absolutely have to expect some mind-blowing price movements on any given day without any news,” Gokhman said.
Reddit’s “astonishing” attention to $ HOOD
Robinhood is by far the most talked about stock in the last 24 hours on WallStreetBets, according to Swaggy Stocks, which tracks mentions on the Reddit page. Robinhood accounted for over a quarter of all ticker mentions on WallStreetBets.
Thinknum Alternative Data, which tracks WallStreetBets’ mentions for hedge funds and banks, found that Robinhood’s volume of mentions is twice that of AMD (AMD), the second most mentioned stock on the page.
Reddit’s focus on Robinhood is “pretty amazing,” said Justin Zhen, co-founder and president of Thinknum, adding that “what’s interesting is that a lot of the sentiment is actually negative.”
In this context, the volume of retail transactions increased tenfold on Tuesday, Reuters reported, citing Vanda Research.
A key approval
Robinhood also benefits from the backing of a closely watched fund manager. Cathie Wood’s ETF Arche Innovation (ARKK) revealed some large and growing Robinhood buys in recent days.
“A lot of retail investors trust Cathie and see her as their generalist in the field,” Gokhman said.
This is all in stark contrast to Robinhood’s difficult start as a public company.
Robinhood valued its IPO low, then quickly fell after it started trading on the Nasdaq last week. The stock ended its first day down 8%, failing to mark the first pop day that new companies are coveting.
More than any other business, Robinhood has benefited from increased retail volumes. Robinhood’s revenue jumped 245% to nearly $ 1 billion last year, as its user growth surged.
Robinhood also benefited from the memes stock phenomenon, in which GameStop (GME), AMC (AMC) and other consumer-focused businesses have grown sharply despite few fundamental changes.
However, Robinhood didn’t seem very popular with traders on Reddit prior to the IPO. Comments on the site’s popular WallStreetBets forum indicated that many individual traders are angry with Robinhood, and some have even threatened to bypass it.
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