Robinhood shares jump over 80% as retail investors plunge

Aug 4 (Reuters) – Shares of Robinhood Markets Inc (HOOD.O) climbed more than 80% on Wednesday before slashing gains, helped by renewed interest from retail traders who crammed into the stock after its disappointing debut in the markets last week.

Online brokerage stocks recently rose 33% to $ 62.29 a share from the session high of $ 85. The stock far exceeded its initial public offering price of $ 38 per share, setting it on track for a fourth straight day of gains and giving it a market cap of around $ 52.9 billion .

Interest in the stock among retail investors has skyrocketed despite its disappointing market debut last week, which saw it drop below its IPO price.

Robinhood was by far the most-mentioned stock in the past 24 hours on WallStreetBets, the Reddit platform at the center of this year’s “meme stock” rally, according to sentiment tracker SwaggyStocks. Retail trade volume increased tenfold on Tuesday, helping the stock gain 24%, according to Vanda Research.

“We know from the same stock trading that has happened over the past few months that when there’s a lot of social media activity, it sometimes makes a stock go up or down,” said Randy Frederick. , vice president of commerce and derivatives for Charles Schwab in Austin, Texas.

Wednesday also marked the first day investors could trade options on Robinhood stocks, giving them another way to bet on the stock. Option trades by retail investors have contributed to outsized moves in shares of companies like GameStop and AMC Entertainment Holdings in recent months. Read more

According to data from Trade Alert, nearly 100,000 contracts changed hands in the first hour of trading, with betting volume exceeding 1.5-1 calls. Contracts betting on stocks exceeding $ 70 on August 20 was the most actively negotiated contract.

The puts that come into play if the stock drops below $ 20 in mid-August were the next most actively traded contract.

Sentiment on Robinhood was also helped by star stock picker Cathie Wood, who heads ARK Invest Management.

The Wood’s Ark Fintech Innovation ETF (ARKF.P) bought a further 89,622 shares of Robinhood on Tuesday, and the stock now represents around 0.9% of its portfolio, according to a summary of the fund’s daily trading.

Overall, Wood’s flagship ARK Innovation ETF (ARKK.P) has accumulated nearly 5 million Robinhood shares, worth approximately $ 229 million.

“People are trying to jump on the back of Cathie Wood’s vote of confidence in Robinhood stocks,” said Thomas Hayes, managing member of Great Hill Capital in New York.

“The catalyst was definitely that Cathie Wood took a big stand after everyone was shot after the IPO.”

Reporting by Sruthi Shankar and Medha Singh in Bengaluru; Sinead Carew and Saqib Ahmed in New York; Editing by Shounak Dasgupta and Shailesh Kuber

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