The Robinhood (HOOD) stock is experiencing bitcoin-like volatility.
The popular trading app company debuted on the Nasdaq last week.
It launched with a bang, with Cathie Wood’s Ark Invest buying 1.3 million shares on its first day.
Although the first few days were a bit of a downer, there was a buying spree that was comparable to what companies like Gamestop or AMC had experienced. In just a few days, HOOD’s capitalization went from $32 billion to $60 billion.
Since yesterday, however, a decline has started. This is nothing unusual for those who are used to cryptocurrencies: after rallies, there are always pullbacks. But there is something else. Some shareholders have announced that they will sell up to 97.9 million class shares. These are those who invested before the stock market launch and who have now evidently decided to monetize. The result has been a vertical collapse in Hood’s price.
Starting out at around $28, they rose to $34 on the day of their debut alone, then the vertical rise began. Yesterday they touched $70 and then plummeted to the current $50, a loss of over 25%.
The volatility of the Robinhood stock
It seems as if Robinhood is experiencing what it has been responsible for: short squeezes and high volatility.
In fact, Robinhood has become an extremely popular trading app in the US, especially during the pandemic. Young and inexperienced people found themselves downloading it and using it for their financial investments in stocks and cryptocurrencies. As its founders would say, Robinhood made finance democratic, which before seemed to be reserved only for big brokers.
However, the Gamestop (GME) case has put it in trouble. The short squeeze that brought a couple of hedge funds to their knees was made possible by the ease with which so many young traders used Robinhood to buy and drive up the price of GME.
And these days it seems that almost the same thing is happening to the shares of HOOD which are currently losing 27%. This volatility is more typical of the cryptocurrency market than the stock market. And it seems that the good performance of bitcoin (which today is back above $41,000, +5%) will not be enough to improve this situation.