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(Bloomberg) – Robinhood Markets Inc. has fallen after shareholders filed for the sale of nearly 100 million Class A common shares less than a week after its initial public offering.
Shares of the trading platform fell 17% to $ 58.30, after early investors offered to sell up to 97.88 million shares over time. None of the proceeds will be received by Robinhood, with the selling shareholders receiving all funds from the sales, according to a filing with the United States Securities and Exchange Commission. Listed sellers are some of Robinhood’s biggest investors and together they own over a third of the company’s current outstanding shares.
The largest of those holders, venture capital firm New Enterprise Associates, plans to reduce its stake by about 10% to about 3.9% or 2.9 million shares. Other vendors named in the case include entities affiliated with Amplo, Andreessen Horowitz, ICONIQ Capital and Ribbit Capital.
Such an early sale by major investors highlights another unusual quirk of Robinhood’s IPO. While most public offerings these days come with a six-month lock-in period during which insiders are not allowed to touch their holdings, Robinhood employees and directors have been able to sell some of their shares from the first day of trading.
The move comes just a day after shares in the no-charge trading platform soared 50% as a flood of retail traders joined larger investors, such as exchange-traded fund ARK. Cathie Wood’s flagship innovation, to buy the share.
Read more: Robinhood soars as retail traders join Wood to Power rally
Individual investors were a key driver of Wednesday’s volatility, with Robinhood the fourth-most-traded stock of the day on retail trading platforms, according to data compiled by Vanda Securities Pte. Retail traders traded $ 467 million in shares with $ 50.5 million in net purchases, the data showed.
The spike in individual investor interest despite Robinhood’s disappointing IPO is a deviation from companies like Coinbase Global Inc. or DiDi Chuxing Inc., which have seen huge retail demand that has declined rapidly, according to Ben Onatibia from Vanda. “After a bad listing, retail demand increases, which is extremely rare with IPOs,” he said in an email.
Some analysts remain cautious. “We cannot in good faith recommend that investors get involved in HOOD long or short term,” Wolfe Research analyst Steve Chubak wrote in a note, throwing a cover on Robinhood with a note. equivalent and a target share price of $ 45.
Shares fell more than 8% on their first day of trading last week after Robinhood valued its IPO at the low end of its expected range. They had then rallied for four straight days, including Wednesday’s rise which reached as high as 82% at one point and pushed Robinhood’s market cap to a high of $ 65 billion.
(Updates to include details on insider selling terms, pricing throughout, and adds analyst commentary in the penultimate paragraph.)
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