While the start had been sluggish, Robinhood definitely seems to be taking off. With a price now exceeding $ 63, up nearly 35% on the day.
Is the trend observed on the day’s session likely to continue? Should we be wary of a sharp correction in the coming days? These are the questions we will try to answer.
Robinhood: A Disappointing IPO
Robinhood’s trajectory is surprising. The US broker’s IPO on July 28 was disappointing all in all. If the price range had been estimated between 38 and 42 dollars, it was ultimately the lower end of this range that was retained for the first known price. Or $ 38 per share. The first day of trading was also impacted by strong criticism from certain market players. Like Short Hills Capital, who rightly pointed out that company executives would retain 60% of the voting rights by owning 16% of the company’s shares. An announcement which had contributed to the loss of 8% during the first day of trading.
But it was above all the ability for employees to sell up to 15% of their shares immediately after the IPO that could have caused the price to drop. Creating in passing an influx of supply into the markets. In the general case, these authorizations come after a period of possession of the asset of 6 months.
While it is not uncommon to experience a negative first day, it was above all the proportions that had worried the markets. If that might have been the case when Facebook stock was released, the decline had not been so severe. And the recovery much longer. By comparison, it took nearly 15 months for the asset to return to its first known price level, also close to $ 38. To see its price double, the stock had waited another 12 months. Robinhood just achieved this feat in less than a week.
Robinhood: Up More than 35% on the Session
It seems that the market is currently correcting this very sharp increase. At the day’s high, the asset price even exceeded $ 77. Between the market opening at 9:30 am to 9:45 am, the asset price rose from $ 54 to $ 77. That’s an increase of over 42% in the space of a quarter of an hour. Crazy volatility that reminds us of the cryptocurrency market. A rise which suggests by its power that it is the result of a large number of independent traders.
According to Sahak Manuelian, trading director of the Wedbush Securities group, the markets respond to principles of the “meme”. According to him, Robinhood would be the same today. As of this writing, the asset is at the $ 65 threshold.
The following chart shows the price of the asset since it was put on the market:
A chart marked by a phase of several days of stagnation before the market explosion since this morning. An explosion that could quickly push the asset into a phase of consolidation.
What to hope for in the long term?
Difficult to answer this question. If the day’s sharp rise appears to be pure speculation, the fundamentals appear to be solid. As shown by the number of users. In the space of one year, from March 2020 to March 2021, the broker experienced an explosion in the number of registered traders. From 7 to 18 million users. Perspectives that could continue, as evidenced by Robinhood’s desire to develop. Especially in the very popular cryptocurrency market.
An explosion in the number of users which is largely linked to two parameters:
- The ease of use of the platform, Robinhood having openly targeted the middle classes and young users
- The sponsorship system particularly attractive to users
Good to know : On yesterday’s trading day, the Robinhood asset was the most popular stock on Fidelity, the leading brokerage firm in the US market.
While a large majority of analysts agree to publish positive ratings on Robinhood stock, some opinions differ. Like David Trainer, who estimates that the company’s market capitalization should not exceed $ 9 billion. It is worth at the current price, more than 50.