Shares of free-trading app Robinhood dropped more than 10 percent moments after debuting on the Nasdaq stock exchange at $38 a share on Thursday.
Trading in the app — known for its role in the “Reddit Rally” retail trading phenomenon that pushed shares of GameStop to new heights earlier this year — kicked off around 12:30 p.m. Thursday at the low end of its $38-to-$42 IPO price range.
Shares quickly fell to as low as $33.35 a share before rebounding slightly. The stock recently traded down 4.5 percent to $36.27 a share, giving it a valuation of $30 billion.
“This kind of trading isn’t unusual for an open — especially for a company this controversial,” said Tim Anderson, managing director at TJM investments.
Still, the IPO is being closely watched in part because Robinhood went public despite a slew of potential regulatory challenges. The company’s CEO was called to testify before Congress after it halted trading in stocks popular with the Reddit Rally crowd, like GameStop and AMC, resulting in questions about its business model.
President Biden’s SEC chief Gary Gensler, meanwhile, has vowed to look into the company’s practice of selling customer order flow to high-speed trading firms like Citadel. “There are costs,” Gensler has said of Roinhood’s no-fee trading promises. “The costs are below the surface.”
And as The Post reported on Wednesday, both retail and institutional traders have been abuzz over the potential short possibilities surrounding the IPO.
Robinhood began trading on Nasdaq under the ticker HOOD after selling 52.4 million shares at $38 a piece, helping it raise $2 billion and giving it a valuation of $32 billion.
The pre-IPO valuation marked a massive jump from the company’s $11.7 billion valuation in September. It now boasts 18 million users and a net profit of $7.5 billion last year.
Robinhood, which has made it a mission to “democratize finance,” also sought to democratize its IPO led by banks Goldman Sachs and JPMorgan.
In a nod to its retail investors, Robinhood set aside around 20 to 30 percent of its shares so users could buy stock at its listing price before it begins trading.