New York (CNN Business)Robinhood cashed in on the meme stock craze. Now Robinhood itself is turning into the next plaything for the retail trading crowd.
Shares of Robinhood spiked as much as 82% early Wednesday — even though the controversial trading company, which debuted on Wall Street just last week, announced no new developments.Robinhood rallied so much that trading was halted multiple times for volatility. In recent trading, Robinhood was up a more modest 35%.
The frenzy comes after Robinhood finished 24% higher on Tuesday, finally breaking above its initial public offering price of $38.
Retail trading volume climbed tenfold on Tuesday, Reuters reported, citing Vanda Research. Robinhood is also benefiting from an endorsement from a closely watched fund manager. Cathie Wood’s Ark Innovation ETF (ARKK) has revealed significant purchases of Robinhood in recent days. Read MoreAll of this is in stark contrast with Robinhood’s rocky start to life as a public company.
Robinhood stumbles in Wall Street debutRobinhood priced its IPO at the low end of expectations and then swiftly fell sharply after it began trading on the Nasdaq last week. The stock ended its first day down 8%, failing to score the first-day pop that new companies covet.More than any other company, Robinhood has benefited from a surge in retail trading volumes. Robinhood’s revenue surged 245% to nearly $1 billion last year as its user growth rose sharply.
Robinhood has also benefited from the meme stock phenomenon, in which GameStop (GME), AMC (AMC) and other consumer-facing companies have been driven sharply higher despite little changing fundamentally.However, Robinhood did not appear to be very popular with traders on Reddit ahead of the IPO. Commentary on the site’s popular WallStreetBets forum indicated many individual traders are angry with Robinhood, and some even threatened to short it.
Source: edition.cnn.com
