Robinhood investors may have final say after lackluster IPO

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It is far too early to make this call. But notably, Robinhood shares debuted at $ 38 – the same price as Facebook (FB) in its IPO in May 2012. Today, Facebook is trading at nearly $ 361.

Robinhood has certainly been on a rollercoaster ride so far: the stock has fallen 8% on day one and fell to $ 33.25 on day two. But it’s since climbed more than 40% above the IPO price and is now trading around $ 54, even briefly hitting a high of $ 85 last week.

“The platform that fueled the memes stock movement has itself become a memes stock – sometimes to the benefit of Robinood and sometimes to its detriment,” said Jonathan Anastas, president of Alpha Esports Tech, a company of mobile games.

Too bad for Reddit’s army of “monkeys” that brings Robinhood to its knees? Perhaps. The company has been credited – and also criticized for – for helping turn investing into something like a game. But Anastas maintains that Robinhood is simply following the money.

“They cater to a demographic of traders that focuses more on emotion and momentum,” Anastas said. “Robinhood is not valued on fundamentals.”

Already looking for acquisitions

Yet Robinhood is now a publicly traded company with a market valuation north of $ 45 billion and is looking to grow its business quickly just like Facebook has done before it.

The platform announced on Tuesday the takeover of Say Technologies, an online shareholder communications platform for individual investors, for $ 140 million in cash.
“Like Robinhood, Say was built on the belief that everyone should have the same access to financial markets as Wall Street insiders,” wrote Aparna Chennapragrada, Robinhood product manager, in a blog post.

“We share a common goal of removing the barriers that prevent people from participating in our financial system,” she added.

The fact that Robinhood is looking to make an acquisition so soon after its IPO is also similar to a big deal Facebook closed in 2012, just before it went public: Facebook bought Instagram for $ 1 billion. dollars, a deal that some found too expensive at the time.

Robinhood share drops after massive two-day hike
Facebook, like Robinhood, also struggled to get out of the door. In fact, this was an even bigger IPO flop, as stocks plunged about 50% below their IPO price in the first few months of trading before touching down. the bottom.

But CEO Mark Zuckerberg ended up having the final say. The acquisition of Instagram has helped Facebook become a bigger mobile player and allowed it to attract even more young users coveted by advertisers. Nine years after its “failed” IPO, Facebook is now worth more than $ 1,000 billion.

Lots of competition in fintech and Wall Street

It’s not clear, however, that Robinhood is on track for a similar increase by 2030. Robinhood CEO Vlad Tenev, like Zuckerberg, will need to stay on top of market trends to become even bigger.

“Robinhood has had a lot of naysayers, but they’ve amassed millions of account holders and the marching orders are clear,” said Michael Kamerman, CEO of Skilling, an online brokerage firm. “I think Vlad wants to attract even more wealthy clients.”

Robinhood will also have to fend off much of the competition over the next decade.

Rival e-commerce companies are fighting over Robinhood, including Webull and eToro, which is in the process of merging with a Special Purpose Acquisition Company (SPAC) so it can go public as well.
Meanwhile, the financial giants Charles Schwab (SCHW) and Morgan stanley (MRS) are also wooing retail traders more aggressively, through their respective acquisitions of online brokers TD Ameritrade and E-Trade.

With that in mind, Robinhood could also someday become a juicy takeover target for a larger financial firm that would likely like access to Robinhood’s younger customer base.

“Wealth has gone from Baby Boomers and Generation X to Generation Y and Generation Z,” Anasta said. “Young investors have different preferences.”

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