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Robinhood shares plummet 10 percent moments after debut

Shares of free-trading app Robinhood dropped more than 10 percent 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. at the low end of its $38-to-$42 IPO price range.

Shares quickly 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 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.”

Man laughing as he walks along a sidewalk flanked by two other people
Robinhood co-founder and CEO Vladimir Tenev (center) walks in New York’s Times Square following his company’s IPO, which saw the price of its shares fall.
AP

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, it raise $2 billion and giving it a valuation of $32 billion.

line chart showing Robinhood stock price
Chart shows the plunge Robinhood stock took after its IPO.
Google Finance

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.

Electronic screens in Times Square read Robinhood
Robinhood began trading on Nasdaq under the ticker HOOD after selling 52.4 million shares at $38 a piece, it raise $2 billion and giving it a valuation of $32 billion.
AP

Robinhood, which has made it a mission to “democratize finance,” also sought to democratize its IPO led by banks Goldman 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.

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