Robinhood surges 17%, runs previous $38 IPO worth

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Baiju Bhatt and Vlad Tenev will attend Robinhood Markets IPO Listing Day on July 29, 2021 in New York City.

Cindy Ord | Getty Images

Robinhood’s shares rose Tuesday, pushing the newly public stock trading app well above its IPO price of $ 38 per share last week.

Robinhood went public on Nasdaq last Thursday under the ticker HOOD, hitting the public markets it seeks to democratize. The stock was priced at $ 38 per share, the lower end of its offering range. It opened at this price on Thursday but then fell 8% on the first day and traded largely below that price through Tuesday.

Robinhood’s stock last traded at $ 44.00 per share, up 17% on Tuesday.

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The Menlo Park, Calif. Based company appears to be attracting retail investor attention Tuesday after shedding around 25% of its IPO shares to its own clients. HOOD is a “top trading stock” at Fidelity, which is generally a good indicator of individual investor interest on a particular day.

There were 5,464 buy orders and 4,503 sell orders from Robinhood on Fidelity on Tuesday. The ticker also appears as one of the most frequently mentioned stocks on Reddit’s WallStreetBets, according to Swaggy Stocks, which aggregates the posts.

“Although we expected a 40% increase on the first day of trading, Robinhood has spoken to a wider range of investors, including major retailers, to break the price limit,” said Greg Martin of Rainmaker Securities. “I now believe that long-term investors, seeing the incredible long-term value of Robinhood, are moving the stock as short-term investors have largely fled the stock.”

Cops love Robinhood for its massive growth, especially during the coronavirus pandemic and GameStop trade mania. Robinhood – which offers stock, cryptocurrency, and options trading, as well as cash management accounts – had 18 million customers in March 2021, up from 7.2 million in 2020, a 151% increase. The company estimates its funded accounts hit $ 22.5 million in the second quarter.

“As Robinhood moves into other forms of funding, including ‘buy now, pay later’ cards, I think [CEO Vlad Tenev’s] Army of 22 million users will grow and become more powerful, “CNBC’s Jim Cramer told Mad Money Monday night.” That’s why I’m telling you Robinhood can be bought here, “added Cramer.

He also said Robinhood could acquire another fintech company to expand more into the payments space, which could boost the stock even further.

Prior to going public, Atlantic Equities gave Robinhood an overweight rating and a 12-month price target of $ 65 per share. Much of Wall Street is still considering its rating for the stock due to the mandatory idle periods of underwriters researching the deal.

“We believe this tremendous user growth will continue given the success of the referral program and product attractiveness with target audiences,” said Atlantic Equities analyst John Heagerty. “We also see opportunities to expand the product portfolio in order to achieve faster sales growth.”

Robinhood has also received a vote of confidence from Cathie Wood at Ark Invest since debuting.

Wood bought around 1.85 million shares of Robinhood on Friday, in addition to the 1.3 million shares she bought Thursday. Wood’s total position is approximately $ 124.5 million based on Robinhood’s current price.

“Nothing would be better than for [Robinhood] to have a perfect price and hold the same price for a few months, “early Robinhood investor Jason Calacanis told CNBC things for a long time last Thursday. That really is the reason for the big wins.”

Robinhood is a five-time CNBC Disruptor 50 company and topped this year’s list. Sign up for our weekly, original newsletter that has a closer look at CNBC Disruptor 50 companies like Robinhood.