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Vlad Tenev and Baiju Bhatt attend Robinhood Markets listing day on July 29, 2021 in New York City.
Cindy Ord | Getty Images
Robinhood shares erupted again on Friday as volatile stocks head towards the end of its first full week of trading up around 60%.
Robinhood shares rose 10% to $ 56.39 on Friday after a boost this week. The new public trading app had a share share moment followed by a surprising share sale announcement.
Robinhood reiterated on Friday that it was not selling any shares, after Thursday’s announcement that existing shareholders would sell up to 97.9 million shares over time. This news caused the title to drop 27% on Thursday.
“Robinhood does not itself sell additional securities but has filed Resale S-1 on behalf of some of its shareholders pursuant to a pre-existing contractual obligation,” Robinhood said.
The stock trading app also clarified on Friday morning that those sales would not start right away, easing concerns about an immediate increase in the supply of shares that could weigh on stocks. Robinhood said those sales could not begin until SEC approval for the transaction, which is not expected to occur until Robinhood’s second quarter results on August 18.
The shares took off in pre-market Friday after the Robinhood clarification.
The rise and fall of Robinhood marked a stark contrast to the lackluster start of the commission-free brokerage on the Nasdaq last week.
Robinhood’s share rise began on Tuesday, when it jumped more than 24%, topping its IPO price by $ 38 per share amid a major buy by the armed investor Cathie Wood. ARK Invest holds 3.2 million HOOD shares in the north.
Wednesday brought a 50% spike in shares in the free trade pioneer, resembling the memes stock rallies the company helped perpetuate in names like AMC and GameStop earlier in the year. The start of options trading also helped boost stocks.
On Thursday, the stock collapsed following the announcement of the sale of shares. Shareholders were among those who helped solidify Robinhood’s balance sheet during the historic business mania earlier this year.
Faced with unprecedented volatility and increased deposit requirements, the broker was forced to use lines of credit and take on new debt to ensure that he had enough cash to complete transactions. Selling shareholders include a number of venture capitalists who invested in Robinhood early on.
The investor-protected notes were converted at a 30% discount from the IPO price, so they bought the shares at $ 26.60 per share, according to Rainmaker Securities. Investors will be able to sell these shares after SEC approval.
“Emergency financings tend to offer short-term exits and a lot of protections for investors. That’s what you get when you need $ 3 billion in 48 hours,” said Greg Martin of Rainmaker Securities. .
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