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Robinhood Markets Inc.
HOOD -27.59%
shares fell 28% on Thursday after a filing with the Securities and Exchange Commission said early investors in the company may sell up to about 98 million shares, currently valued at nearly $ 5 billion , over time.
The record names more than a dozen shareholders who bought notes that could then be converted into shares ahead of the company’s initial public offering. Selling shareholders include technology private equity firm Andreessen Horowitz, Iconiq Capital LLC, Greenoaks Capital and Ribbit Capital LP.
The operator of the investment platform said it will not receive the money from these sales and that selling shareholders will receive all proceeds if they choose to sell.
Robinhood closed Thursday at $ 50.97, up about 34% from its IPO price of $ 38.
Ribbit Capital is the biggest beneficiary. If the company sold based on Thursday’s closing price, entities affiliated with the company would earn more than $ 988 million. Entities affiliated with Andreessen Horowitz would earn more than $ 470 million, based on Thursday’s closing price, while entities affiliated with venture capital firm Index Ventures would earn nearly $ 100 million.
Many shareholders who are expected to reap big profits are among those who participated in an emergency fundraiser for Robinhood earlier this year after the popular online brokerage faced increased collateral requirements during the frenzy. even stock trading.
Robinhood’s decline in share price marks the latest turn in what has been a volatile trading period for the company, which made its public debut on the Nasdaq last Thursday. The company’s stock price fell on its first trading day before rebounding sharply this week. Shares soared on Wednesday, hitting an intraday high of $ 85, more than double the company’s IPO price.
A combination of factors helped push the stock up, including the start of options trading on Wednesday and the enthusiasm of individual investors, many of which accumulated after noting that Cathie Wood, Managing Director and Chief Investment Officer of ‘ARK Investment Management LLC, had taken over Robinhood. shares in at least three ARK exchange-traded funds.
The SEC filing angered some retail investors on Reddit’s WallStreetBets forum, some of whom bought shares as the stock soared on Wednesday. Individual investors on Wednesday bought $ 50.5 million net of Robinhood shares, according to VandaTrack data from Vanda Research, slightly above their net purchases from the previous four trading days combined.
The Robinhood brokerage app has transformed the retail business. The WSJ explains its rise amid a series of legal investigations and regulatory challenges. Photographic illustration: Jacob Reynolds / WSJ
Write to Caitlin Ostroff at [email protected] and Caitlin McCabe at [email protected]
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Appeared in the August 6, 2021 print edition under the title “Robinhood Shares Sink 28% as Early Investors Plan Sales”.
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