Robinhood Markets Inc., the trading app synonymous with hot stocks, received a chilly reception from investors on its own stock market debut.
The investment app fell on its highly anticipated commercial debut on Thursday, closing 8.4% below its initial public offering price. Robinhood shares opened at $ 38, matching the IPO price, and quickly fell more than 10%. Later, the stock rose to get closer to the IPO price before falling again in the last hour of trading to close at $ 34.82.
It was a disappointing debut for the company that brought the markets to the masses. Robinhood and his bankers tried to avoid a poor performance on the first day by setting the stock price at the bottom of their target range at a value of about $ 32 billion. A successful first day was even more important because Robinhood sold a large portion of its stock to its own clients.
Breaking the Wall Street convention of giving individual investors only a miniscule portion of hot IPOs, Robinhood sold between 20% and 25% of its offering to its clients, according to people familiar with the matter.
“One of our company’s values is ‘participation is power,'” Chief Executive Vlad Tenev said in an interview. “It didn’t seem right to us that IPOs would have been normally reserved for the top 1%.”